June issue 2011

June 2011

TOP 100

2011 Food and Drink Manufacturers in the UK and Ireland

Food & Drink Business Website:

www.foodanddrinkbusiness.com

C o n t e n t s

- 39 F ROZEN F OODS

- 3 M ERGERS & A CQUISITIONS

McCain Foods grows green credentials.

Coverage of British and international deals.

- 9 C OVER S TORY The Top 100 food and drink manufacturers in the UK and Ireland.

PAGE 9

- 41 M ARKET F OCUS

Ranjit Singh Boparan, ce, Boparan Holdings.

Marine ingredients – The next wave in functional food innovation.

P AGE 17

Stella David, ce, William Grant & Sons.

Record UK grocery market share for discounters.

- 22 D AIRY

R EGULARS

Dairy Crest well placed to face challenges ahead.

PAGE 18

Bottling & Packaging. . . . . . . . . 20, 30, 37 PAGE 11

Patrick Coveney, ce, Greencore.

- 27 -

Paul Moody, ce, Britvic.

Information Technology . . . . . . . 23-25, 42 Logistics & Distribution . . . . . . . 31, 38, 46 Processing & Manufacturing . . . . . . . . . 45

C ONFECTIONERY Challenging times for Thorntons.

- 29 S OFT D RINKS Hot prospects for Lipton Ice Tea.

PAGE 13

Robert Schofield, ce, Premier Foods.

Energy & Environment. . . . . . . . . . . . . . 47

PAGE 35

Materials & Ingredients . . . . . . . . . . . . . 48

Ray Coyle, ce, Largo Foods.

Managing Director: Colin Murphy Editor: Mike Rohan Sales Director: Ronan McGlade Advertising: Susan Doyle, Stuart Atkinson. Senior Sales Executive: Paul Lees Production Manager: Susan Doyle

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- 31 B REWING

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Repositioned Carlsberg on track to meet targets.

- 33 S NACK F OODS Entrepreneurial drive powers Largo Foods.

PAGE 15

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Javed Ahmed, ce, Tate & Lyle.

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FOOD & DRINK BUSINESS EUROPE, JUNE 2011

1

M E E R R G G E E R R S S M Heineken Expands in Africa With Two Acquisitions In line with its strategy of increasing exposure to emerging markets, Heineken is acquiring two breweries in Ethiopia, after being named the preferred bidder by the Ethiopian Government following a public auction. Heineken is paying $85m and $78m respectively for the Bedele and Harar breweries.

The two breweries have a combined market share of 18% with brands such as Bedele, Harar, Hakim Stout and Harar Sofi (malt). Ethiopia is Africa’s second most populated country with 85 million people and its beer market (3m hectolitres in 2010) has grown by approximately 20% per year over the past five years, compared to a GDP growth of 8%.

& &

A C C Q Q U U II S S II T T II O O N N S S A

Sherbet Fountain, Henry Goode’s soft eating liquorice and Princess marshmallows. In addition, Tangerine manufactures own brand products for all of the UK’s leading high street food retailers. Within five years, it aims to be the largest independent manufacturer of confectionery in Europe.

Tangerine is part-owned by private equity firm Growth Capital Partners.

Tangerine recently gained a top 20 place in the latest Sunday Times Deloitte Buyout Track 100. The league table ranks Britain’s 100 private equity-backed companies with the fastest-growing profits (EBITDA) over the last two years of available accounts.

which all but one are freehold, and their offer is a well developed and highly successful one, targeting the premium, pub dining customer within London. The acquisition is being funded by Greene King’s existing bank facility. ”We continue to supplement strong underlying organic growth with targeted, value-creating acquisitions to accelerate our strategic aim of growing our retail business to around 1,100 pubs and building the best retail estate in the UK,” says Rooney Anand, chief executive of Greene King.

Yinlu's 2010 sales amounted to around SFr750m (Eur584m).

Yinlu’s products are tailored to Chinese consumer taste and habits, and complement Nestle’s existing product portfolio in China, which includes culinary products, coffee, confectionery, bottled water, milk powder and products for the food service industry.

Nestle has been present in China for over twenty years and today operates 23 factories, two R&D Centres and employs 14,000 people. Nestle in the China region achieved sales of SFr2.8b in 2010. Main Nestle brands in China include Nescafe, Nan, Maggi, KitKat as well as local brands such as Haoji and Totole.

Tate & Lyle Completes Retreat From Sugar

Jean-François van chairmanof Heineken.

Boxmeer.

Blackstone Eyes Tangerine Confectionery Private equity firm Blackstone Group is in exclusive talks to acquire Tangerine Confectionery, the largest manufacturer of sugar confectionery and branded popcorn in the UK, in a deal worth more than £100m.

Earlier this year, Tangerine was reported to be seeking a new private equity investor to help fund further expansion.

Since its formation in 2005, following the buy-out of Danish company Toms, Tangerine Confectionery has quadrupled in size through both organic growth and acquisition. Current turnover is over £150m and Tangerine Confectionery employs over 1,300 people.

Tangerine has eight production facilities and a distribution depot and owns brands such as Butterkist popcorn, Barratt

Cargill’s German Chocolate Acquisition Receives Green Light The European Commission has cleared Cargill’s acquisition of.

KG Kakao Verarbeitung Berlin (KVB), an integrated chocolate company based in Germany, for an undisclosed sum. The acquisition marks a significant step in Cargill’s chocolate growth strategy in Europe, strengthening its position in Germany, the largest chocolate market in Europe, and creates opportunities to expand into new markets. KVB’s two plants in Berlin will complement Cargill’s existing German cocoa and chocolate facilities in Klein Schierstedt and Hamburg.

Greene King Completes Pubs Acquisition UK regional brewer and pub operator Greene King has completed the £53.1m acquisition of Realpubs in line with its strategy to expand and improve the quality of its retail estate.

Realpubs currently operates 14 premium London pubs, of

Tate & Lyle is disposing of its sugar interests in Vietnam to TH Milk Food Joint Stock Company, a local Vietnamese company, for £33m. The transaction is expected to be completed in the first half of the current financial year.

The sale completes a two year disposal strategy that has entailed Tate & Lyle divesting its sugar factories around the world in order to focus on its Speciality Foods business, which produces the sweetener Sucralose, and its Bulk Products division, which manufactures products such as corn syrup.

Nestle Expands in China Nestle has taken a 60% stake in Chinese food company Yinlu Foods Group for an undisclosed price. Family-owned Yinlu is a well established household brand in China and a significant marketer for readyto-drink peanut milk and ready-to-eat canned rice porridge.

The deal builds on an already successful partnership between the two companies, as Yinlu is a co-manufacturer for ready-todrink Nescafe coffee in China.

FOOD & DRINK BUSINESS EUROPE, JUNE 2011

Heineken Looks to Expand in Brazil Heineken is reported to be considering making an offer to acquire Primo Schincariol Industria de Cervejas Refrigerantes, the second largest brewer in Brazil behind Anheuser-Busch InBev. Primo Schincariol Industria de Cervejas Refrigerantes is estimated to be worth in the region of £2b.

Such an acquisition move would be in line with Heineken’s strategy of developing its presence in fast growing emerging beer markets of the world to help balance its exposure to sluggish mature regions such as Western Europe and the US. Heineken is already present in Brazil, the world’s third largest beer market by volume, through its partnership with Cervejarias Kaiser.

Gumlink Takes Stake in Canadian Probiotic and Nutraceutical Gum Manufacturer Gumlink of Denmark has strengthened its leading posi3

M E E R R G G E E R R S S M tion in the global nutraceutical chewing gum market by acquiring a 50% stake in Canadabased Tab Labs. Chewing gum is an ideal delivery system for nutraceutical products.

Like Gumlink, Tab Labs produces gum for the B2B market and has recently shifted its focus towards the increasingly attractive functional and nutraceutical market. Tab Labs has especially concentrated on upgrading its facilities to accommodate extremely sensitive active ingredients such as probiotics.

Gumlink is the world’s leading B2B developer and manufacturer of chewing gum. It has accumulated vast expertise and experience in the pharmaceutical industry through sister company Fertin Pharma. This allows Gumlink to create nutraceutical concepts.

The joint venture is among

& &

A C C Q Q U U II S S II T T II O O N N S S A

the first initiatives in Gumlink’s nutraceutical strategy for the future, launched in January 2011, involving strategic collaborations with various industry partners.

Orior Acquires Swiss Tofu Producer Swiss food group Orior, through its Fredag subsidiary, has acquired Bernatur, the leading tofu producer in Switzerland, for an undisclosed price. Bernatur employs approximately ten people and has a production site in Mels (Canton St Gallen). Fredag already produces a wide variety of vegetarian meat substitute products and Bernatur will complement its portfolio.

Orior specialises in the production and distribution of fresh convenience foods, including vegetarian delicatessen products and refined meats. Orior achieved revenues of SFr506m (Eur395m) in 2010 and employs about 1,300 people.

Nestle Waters Extends Portfolio Nestle Waters is expanding its portfolio of bottled water to include high quality iced teas, lemonades and juices through acquisition. Nestle Waters North America is acquiring the

Sweet Leaf Tea Company, including its Sweet Leaf and Tradewinds beverage brands.

The acquisition – which remains subject to regulatory approval and satisfaction of other customary closing conditions – follows an initial investment by Nestle Waters in the Sweet Leaf brand in March 2009.

Nestle Waters North America is the leading bottled water company in the US, with sales topping $4b in 2010. In the US, the company produces six regional spring water brands; one nationally distributed puri-

fied bottled water named Nestle Pure Life; and three international bottled water brands.

Worldwide, Nestle Waters has 64 brands, and operates 97 factories in 36 countries.

Zetar Strengthens Confectionery Business Zetar, the UK confectionery and snack foods company, has acquired Derwent Lynton for a maximum consideration of up to £0.8m. Based in Derby, Derwent Lynton is a chocolate confectionery manufacturer specialising in solid milk chocolate and chocolate flavour balls and eggs, hollow milk chocolate shapes, sugar-coated milk chocolate products including eggs & beans and chocolate drops.

Its operations will form part of Zetar’s confectionery division. In the year ended 30th June 2010, Derwent Lynton had sales of £4.2m and an operating profit of £114,000. At 30th June 2010 net assets amounted to £0.6 million.

General Mills Takes Control of Yoplait For €810 Million US-based food gr-oup General Mills has signed definitive agreements with European private equity firm PAI partners and Sodiaal to acquire a 51% controlling interest in Yoplait SAS and a 50% interest in a related entity that holds the worldwide Yoplait brands for Ken Powell, chairman and chief approximately €810m. executive of General Mills.

Sodiaal, the leading French dairy co-operative, will hold the remaining ownership stakes in both entities.

Headquartered in Boulogne-Billancourt, France, Yoplait is the second largest brand in the global yogurt market, a category with 2010 retail sales totaling approximately $65b. Yoplait products are available in more than 70 countries around the world. The company has direct operations in countries including France, the UK and Canada, and also manages a network of 26 franchisees that license Yoplait brands. Yoplait employs approximately 1,900 people and reported revenues of Eur724m for its fiscal year ended June 30th, 2010. In December 2010, Yoplait acquired the Liberte yogurt business in Canada. Liberte 4

FOOD & DRINK BUSINESS EUROPE, JUNE 2011

reported sales of C$186m for its fiscal year ended December 31st 2010.

The business will be governed by a supervisory board with representation from General Mills and Sodiaal.

General Mills currently expects the transaction, which is subject to regulatory approval, to close during the first quarter of its 2012 fiscal year, which began on May 30, 2011.

General Mills and Sodiaal intend to work together to support accelerated growth of Yoplait worldwide. The global yogurt market is one of the most attractive food categories in the world. Consumer demand is growing in response to increased interest in foods that emphasise nutrition, convenience, flavor variety and value. In addition, per capita consumption levels for yogurt are still quite low in many international markets.

I

CAPITAL INVESTMENT

Nestle Invests €70 Million in Germany and China estle has expanded its production N capacity in Germany and China with combined investment of Eur70 million.

Nestle Professional has strengthened its presence in the food service industry by investing Eur35 million to extend its premium frozen baked cakes and desserts factory at Erlenbacher in Germany.

The new addition aims to increase the factory’s capacity by 50%, enhance production line performance, and extend operational, logistics and storage space.

Furthermore, the extension includes new lines which will produce frozen single portions, a response to the demand for smaller individual-sized desserts such as mini

Nestle has opened a new seasoning production line at its Maggi factory in Dongguan, China.

I

tartlets, bites and cups.

As part of Nestle’s long-term commitment to environmental sustainability, the new investment will also continue to address the factory’s energy and water consumption. For example, its cleaning procedures have helped reduce its water withdrawals by 13.5%, from 2009 to 2010.

Furthermore, a new cleaning system for its freezers has saved 2.2 million litres of water.

Globally, Nestle Professional is present in more than 90 countries – with over 10,000 employees including a large number of skilled chefs – operating 14 food service factories, culinary centres, and the Nestle Professional Beverage Centre in Switzerland.

New Production Line in China Meanwhile, Nestle has opened a new seasoning production line at its Maggi factory in Dongguan, China, marking the completion of the first phase of the group’s SFr44 million (Eur35 million) expansion project.

The new state-of-the-art production line aims to increase the factory’s annual production capacity of Maggi liquid seasoning products by 1,700 tonnes.

The Maggi Dongguan factory also produces a selection of culinary products

Nestle Professional has invested Eur35 million to extend its factory at Erlenbacher in Germany.

including seasoning, flavourings and soups.

Maggi seasoning has been very popular for both professional and household cooking, and the factory expansion will enable Nestle to meet the increasing market demand.

Completion of the expansion project – expected in 2015 – looks set to increase the factory’s production capacity by 300%. J

BREWING

Solid Performance By SABMiller lobal brewer SABMiller has reported a G 7% rise in group revenue to $28.3 billion, with organic, constant currency group growth of 5% for the twelve to March 31st 2011. Lager volumes of 218 million hectolitres were 2% ahead of the prior year on an organic basis with particularly good growth in Africa, South Africa and Asia.

Reported EBITA rose 15% to $5.04 billion, with organic, constant currency EBITA growth of 12%: Organic EBITA growth was 11% in Latin America, 20% in Africa, 33% in Asia and 11% in South Africa. Disciplined revenue management, synergies and cost savings helped to increase North American organic EBITA by 20%.

In Europe, EBITA increased by 2% (4% on a constant currency basis) to $887 million, despite lager volumes falling by 3% 6

for the year amid difficult economic and industry conditions, including competitor discounting. The first half of the year was particularly challenging as a result of significant excise increases in Russia and the Czech Republic as well as extensive flooding and the mourning period following the death of the president in Poland.

The second half of the year saw improvFOOD & DRINK BUSINESS EUROPE, JUNE 2011

ing volume trends across most markets, albeit compared to a relatively weak prior year base. While lower volumes and down trading impacted profitability, lower raw material costs and cost efficiencies more than offset this, driving the increase in EBITA. Miller Brands, SABMiller’s UK business, increased lager volumes by 23% during the year. All brands in the UK portfolio recorded double digit growth, with Peroni Nastro Azzurro continuing its strong performance, growing volume 21% - in the context of a premium lager sector which grew only marginally. Launched in 2005 Miller Brands has responsibility for the development of SABMiller’s international premium brands across the UK and Ireland; these include Peroni Nastro Azzurro, Pilsner Urquell and Miller Genuine Draft. J

COVER STORY

The Top 100 Food and Drink Manufacturers in the UK and Ireland Food & Drink Business Europe publishes its sixteenth annual ranking of the leading one hundred food and drink manufacturers in Britain and Ireland, and also highlights some of the key developments within the industry during the past twelve months.

T

he Top 100 companies are ranked according to their most recently available turnover, and pre-tax profit figures and ownership are also listed.

Companies with turnovers in excess of £1 billion occupy the top 21 places.

The 2011 Top 100 features companies ranging in scale from Unilever’s food business, which due to its global reach is the perennial leader of the annual league table and achieved sales of Eur22.8 billion (£19.4 billion) in 2010, down to the £129 million turnover Baxters Foods Group. Diageo is the largest beverages group, while Premier Foods is the largest UK domestic food processor.

Of course, fourth ranked Cadbury is now owned by US-based Kraft Foods.

M&A Activity Merger and acquisition activity again remained subdued during the past twelve months but there are indications of recovery since the start of 2011 with the pace and size

The combined Boparan/Northern Foods business will rival Premier Foods as the UK’s largest domestic food processor.

Ranjit Singh Boparan, chief executive of Boparan Holdings.

of deals increasing. The biggest deal in the last year involving companies within the Top 100 is Diageo’s agreed acquisition of Mey Icki, the leading spirits company in Turkey, for an enterprise value of £1.3 billion.

Another spirits group, William Grant & Sons, which is famous for the Glenfiddich Scotch malt whisky brand, entered the Irish whiskey category after acquiring the spirits and liqueurs business, including the Tullamore Dew brand, of Irish and UK cider maker C&C Group for Eur300 million last July. The Scottish group subsequently sold the liqueurs business to Campari of Italy for Eur128 million. With sales of 600,000 cases Tullamore Dew is the world’s second largest Irish whiskey brand and provides William Grant with the opportunity to accelerate growth of its nonScotch business.

Finnish food group Raisio, best known for its cholesterol lowering Benecol brand, increased its presence in the UK in February with the Eur95.3 million acquisition of Big Bear Group, the breakfast cereals, snack bars and confectionery producer. The deal is in line with Raisio’s growth strategy to become the leading provider of healthy snacks in Europe. Great Britain is now the largest FOOD & DRINK BUSINESS EUROPE, JUNE 2011

market area within Raisio’s food business with Eur140-150 million in annual net sales.

Raisio had already established a presence in the British snacks market following its Eur22.8 million acquisition of Glisten in 2010.

The most unusual transaction involved Uniq, which has been slimmed down from an international convenience food producer into a UK-focused private label business in the food to go and desserts sectors during the past few of years. In February, Uniq’s pension debt of more than £400 million was exchanged for a 90.2% stake in the group, which is now held by the Uniq Pension Scheme. £342 Million Acquisition of Northern Foods The most important deal in the past year, in terms of its implications for the UK food industry, is the audacious £342 million acquisition of Northern Foods, one of Britain’s largest convenience food processors,

by Boparan Holdings, which incorporates the 2 Sisters poultry group. The last minute bid effectively snatched Northern Foods

Paul Pulman, chief executive of Unilever.

9

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cost reductions to improve operating profit margins. However, the acquisition spree left Premier with indigestion and it has been shedding businesses recently to try and reduce its debt mountain.

Since the start of 2011, Premier Foods has sold its East Anglian canned grocery operations to Princes, another Top 100 company, for £182 million and its meat-free business for £205 million. The two disposals have helped Premier Foods to cut debt from

£1.2 billion to below £900 million, as it continue to pursue its strategy of growing its brands.

Unlike Unilever, Tate & Lyle and Associated British Foods, which have developed overseas interests, Premier Foods is dependent on the British market. While its branded business held firm in 2010, its non-branded operations proved problematic, especially the Brookes Avana own label bakery and prepared foods business where an

Patrick Coveney, chief executive of Greencore.

from under the nose of Greencore, also one of the largest convenience food groups in the UK, which was confident of achieving an all-share merger of equals to form Essenta Foods, a £1.7 billion turnover business.

The integration of Northern Foods into Boparan will create a £2 billion turnover powerhouse within the British convenience foods market. The acquisition is one of the most significant in the UK food industry since Premier Foods’ purchase of RHM in early 2007. Indeed, the combined Boparan and Northern Foods will now rival Premier Foods as the UK’s largest domestic food processor.

From humble beginnings in 1993 as a small-scale retail frozen poultry cutting operation, Boparan Holdings has developed into a major international business through a combination of organic growth and acquisitions. Boparan Holdings remains a private company owned by Ranjit Singh Boparan and his wife Baljinder.

Indigestion at Premier Foods Premier Foods became the UK’s largest indigenous food manufacturer, after its £480 million purchase of Campbell Soup’s UK and Irish business followed soon after by the £1.2 billion takeover of rival RHM in 2007.

Armed with a strong brands portfolio, including well-known household names such as Hovis bread, Mr Kipling cakes, Bisto gravy, Ambrosia and Bird’s desserts and Branston pickle, Premier Foods’ strategy has been to grow its branded sales, whilst also supplying retailer own label products, and focusing on efficiency improvements and

Paul Walsh, chief executive of Diageo..

TOP 100

Company 1 (1) Unilever (Food)

2 3 4

Food and Drink Manufacturers in the UK and Ireland

Turnover Pre-tax Profits Ownership/Status £19.38b £2.99b* plc

(2) Diageo £9.78b £2.24b (3) Associated British Foods £10.17b £763.0m (4) Cadbury £5.97b £378.0m

5 (5) Kerry Group 6 (6) Tate & Lyle 7 (8) Premier Foods 8 (14) Glanbia 9 (11) Heineken UK 10 (16) Coca-Cola Enterprises

£4.22b £3.51b £2.57b £1.84b £1.69b £1.62b

£334.6m -£61.0m -£98.3m £114.5m -£201.9m £239.1m

11 (15) Irish Dairy Board 12 (13) Dairy Crest 13 (12) Bakkavor

£1.62b £1.61b £1.57b

£22.9m £77.8m -£20.4m

14 (17) Arla Foods UK

£1.48b

£31.3m

15 (20) InBev UK

£1.48b

-£246.0m

16 (18) Nestle UK 17 (19) MolsonCoors Brewing

£1.45b £1.35b

£74.0m £28.7m

18 (27) Tulip

£1.14b

£83.6m

19 (23) Britvic 20 (10) Princes

£1.14b £1.09b

-£28.8m £40.7m

plc plc Acquired by Kraft Foods, US Irish co-op/plc plc plc Irish co-op/plc Heineken, Netherlands Coca-Cola Enterprises, US Irish dairy co-ops plc Bakkavor Group, Iceland Arla Foods, Denmark/Sweden Anheuser-Busch InBev, Belgium Nestle, Switz.

Molson Coors Brewing, US Danish Crown, Denmark plc Mitsubishi, Japan

Source: KEY NOTE, company accounts. * operating profits. Eur = £0.85. Figures in brackets indicate previous year’s rankings.

FOOD & DRINK BUSINESS EUROPE, JUNE 2011

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first time, marking the sixth consecutive year of growth. Amongst the highest performing sectors were dairy (up 24.6% to £977 million), fish and seafood (up 13.8% to £1.3 billion), meat (+11.7% to £1.5 billion), prepared foods including soups, sauces and ice creams (+10.3% to £2.6 billion) and cereals and bakery (+8.1% to £2.1 billion).

Ireland remains the principal importer of UK products followed by France, Netherlands, Germany and Spain. UK

Robert Schofield, chief executive of Premier Foods.

impairment charge of £125 million was incurred, leaving Premier Foods with a pretax operating loss of £98 million. Premier Foods is in the process of searching for a new chief executive to replace Robert Schofield, who is retiring.

Tate & Lyle has also been disposing of businesses. It recently sold its EU sugar refining operations to American Sugar Refining, the largest cane sugar refiner in North America, for £211 million, and its Molasses operation to UK-based W& R Burnett for £67 million. The deals were part of a disposal strategy that has entailed Tate & Lyle divesting its sugar factories around the world in order to focus on its speciality foods business, which produces the sweetener Sucralose, and its bulk products division, which manufactures products such as corn syrup.

Export Markets Faced with an intensely competitive home market, many food and drink manufacturers have accelerated their export development.

Exports of UK food and non-alcoholic drinks rose by 11.4% to £10.83 billion in 2010 to pass the £10 billion mark for the

TOP 100

exporters have also been successful in targeting new markets outside the EU. Food and drink export sales from the Republic of Ireland were also up in 2010, rising by 11% to reach Eur7.9 billion (£6.7 billion).

Exports of Scotch whisky reached record levels in 2010 with global shipments rising by 10% to reach £3.45 billion. Scotch whisky exports have increased by 60% since the turn of the century, adding an extra

Food and Drink Manufacturers in the UK and Ireland

Company

Turnover Pre-tax Profits Ownership/Status

21 (22) United Biscuits (UK)

£1.05b

£114.6m

Blackstone, PAI Partners & Kraft Foods

22 (24) Northern Foods

£977.0m £7.4m

Acquired by Boparan Holdings

23 (29) Carlsberg UK £946.5m 24 (28) Robert Wiseman Dairies £917.5m 25 (30) Hilton Food Group £864.2m 26 (26) Greene King £851.6m 27(46) William Grant & Sons Holdings £838.3m 28 (34) Moy Park £789.6m 29 (35) HJ Heinz £766.3m 30 (31) Dawn Meats Group £765mE 31 (33) Cranswick £758.0m 32 (42) Boparan Holdings £739.1m

-£10.0m

Carlsberg, Denmark.

£34.4m

plc

£22.2m

plc

-£82.4m

plc

£114.7m

Independent

£18.3m

Marfrig, Brazil

£139.8m

HJ Heinz Co, US

nd

Irish independent

£47.1m

plc

£30.0m

Incorporating 2 Sisters Food Products – Independent

33 (-) Mars Chocolate UK £729.6m 34 (41) Constellation Europe £728.9m 35 (25) Greencore £727.6m 36 (32) Irish Food Processors £720mE 37 (50) C&C Group £671.2m 38 (47) Samworth Bros Holdings £668.8m 39 (43) Kellogg UK £666.7m 40 (39) Marston’s £650.7m Geoff Eaton, chief executive of Uniq.

£137.6m

Mars, US

£11.9m

Constellation Brands, US

£25.8m

Irish plc

nd

Irish independent

£67.2m

Irish plc

£46.7m

Independent

£9.7m

Kellogg Co, US

£52.5m

plc

Source: KEY NOTE, company accounts. * operating profits. Eur = £0.85. Figures in brackets indicate previous year’s rankings.

FOOD & DRINK BUSINESS EUROPE, JUNE 2011

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However, following turmoil in global financial markets, especially in Iceland, and a plunge in Greencore’s share price, Bakkavor was forced sell its stake, incurring a loss of £58.5 million. However, if Greencore does not act swiftly, it is in danger of becoming a takeover target.

Greencore had identified cost synergies of £40 million per annum from its original merger proposal with Northern Foods. The same level of synergies is not available to

Boparan and in the long-term Northern Foods’ Fox’s biscuits and Goodfella’s pizzas branded operations may well be put up for sale as Boparan decides to focus on its predominantly private label business and to reduce debt through divestment.

United Biscuits, the British and international biscuits and snacks manufacturer, is still up for auction with a £1 billion-plus price tag, and is likely to be broken up when it is eventually sold off by

Javed Ahmed, chief executive of Tate & Lyle.

£1.29 billion in value. The performance reflects the continued premiumisation of Scotch whisky as export value increased despite a marginal decrease in volume sales.

Future Deals M&A activity with the UK food and drink industry is likely to accelerate in the future.

With healthy funds now available to them, many private equity firms that are interested in the food and drink sector, such as Lion Capital and PAI Partners, are seeking both buying and selling opportunities. Indeed, private equity firms such as Langholm and Darwin have been looking at smaller deals in niche, branded categories. For instance, two private equity firms - Exponent and Intermediate Capital Group - recently acquired Premier Foods’ meat-free business for £205 million.

Although thwarted in its bid for Northern Foods but still convinced of the considerable strategic merits of consolidation within the UK convenience food sector, Greencore will seek further opportunities for mergers and acquisitions. Bakkavor and Uniq are potential targets as Greencore seeks a partner to significantly increase scale.

Indeed, Greencore and Bakkavor have been seen as merger partners in the past. In 2008, Bakkavor, the Icelandic food group which became one of the leading fresh prepared food processors in Britain after acquiring Geest for £580 million in 2005, built up an 11% stake in Greencore.

TOP 100

Company

41 (45) Gerber Emig Group 42 (36) Atlantic Industries 43 (37) Pepsi Cola International 44 (38) Kepak 45 (51) Dairygold Co-op 46 (48) Kraft Foods UK 47 (44) Vion Food UK 48 (52) Noble Foods

Food and Drink Manufacturers in the UK and Ireland

Turnover Pre-tax Profits Ownership/Status

£635.8m £15.3m

Quadrigo Holdings

£635mE

nd

Coca-Cola, US

£635mE

nd

PepsiCo, US

£635mE

nd

Irish independent

£589.6m £16.1m*

Irish co-op

£564.4m £10.0m

Kraft Foods, US

£561.8m -£19.5m

Vion, Netherlands

£533.5m £21.7m

Independent – formerly Deans Foods

49 (49) Warburtons 50 (54) Chivas Bros 51 (58) Young’s Seafood

£510.5m £62.8m

Independent

£487.1m -

Pernod Ricard, France

£475.6m -£23.4m

Part of Findus Group – Lion Capital, UK

52 (55) Edrington Group 53 (53) Birds Eye 54 (59) Allied Domecq Spirits & Wine

55 (56) Muller Dairy UK 56 (57) Irish Distillers Group 57 (61) Sun Valley Foods 58 (60) McCain Foods GB 59 (66) Farmers Boy

£468.3m £125.0m

Independent

£466.1m £58.5m

Permira

£419.0m £225.0m

Pernod Ricard, France

£400.6m £36.9m

Alois Muller, Germany

£380mE

Pernod Ricard, France

nd

£375.1m -£3.6m

Cargill, US

£358.2m £45.7m

McCain Foods, Canada

£352.6m £49.7m

W Morrison Supermarkets plc

60 (67) Heineken Ireland Peter Lauritzen, chief executive of Arla Foods UK.

£341.7m nd

Heineken, Holland

Source: KEY NOTE, company accounts. * operating profits. Eur = £0.85. Figures in brackets indicate previous year’s rankings.

FOOD & DRINK BUSINESS EUROPE, JUNE 2011

15

hands with Blackstone Group in exclusive talks to buy a 40% stake, currently owned by another private equity firm Growth Capital Partners, in a deal worth more than £100 million.

Since its formation in 2005, following the buy-out of Danish company Toms, Tangerine Confectionery has quadrupled in size through both organic growth and acquisition. Current turnover is over £150m and Tangerine Confectionery employs over

Stella David, chief executive of William Grant & Sons.

private equity firms Blackstone Group and PAI Partners. Now under the leadership of new group chief executive Benoit Testard, United Biscuits did attracted the interest of Chinese food conglomerate Bright Food Group but the deal broke down over price.

Dairy Crest has recently been the subject of acquisition speculation after Theo Muller, the privately owned German-based dairy group which is also the leader in the UK yoghurt market, increased its stake to a declarable 3.04%. Acquiring Dairy Crest would carry a £1 billion price tag.

Sweet Deal Tangerine Confectionery, the largest manufacturer of sugar confectionery and branded popcorn in the UK, is set to change

TOP 100

Company

69 (73) Meadow Foods 70 (74) Tata Global Beverages 71 (77) Walkers Snack Foods 72 (-) Foyle Food Group 73 (71) The Cheese Company 74 (82) Cott Beverages

Turnover Pre-tax Profits Ownership/Status Irish co-op

-£4.0m

Independent

£1.8m

AarhusKarlshamn,

£322.2m £97.2m

Lion Capital, UK

£311.9m £3.6m

Duke Street Capital

£311.9m -£11.2m

Uniq Pension Fund

£274.6m £7.7m

Hillesden Investments

£265.7m £6.5m

Icelandic Group, Iceland

£263.1m £5.5m

Independent

£263.0m £19.7m

Tata Tea, India

£261.4m £20,7m

PepsiCo, US

£236.6m £2.6m

Independent

£235.0m £3.7m

Milk Link Co-op

£229.2m £8.6m

Cott Corporation, Canada

£26.8m

plc

£30.4m

plc

-£2.2m

Charles Wells & Young’s

£211.3m £31.7m

UB Group, India

Northern Ireland

£207.7m £6.1m

Coca-Cola HBC, Greece

Company

£200.1m £2.0m

plc

80 (79) The Real Good Food

Gharry Eccles, chief executive of Mullet Dairy (UK).

£3.8m

Sweden/Denmark

75 (80) Fuller Smith & Turner £227.7m 76 (84) AG Barr £222.4m 77 (81) Wells & Young’s Brewing £211.6m 78 (78) Whyte & Mackay Group 79 (86) Coca-Cola Hellenic

Outlook In general, the 2010 financial results from Top 100 companies show a marked improvement but this is hardly surprising

Food and Drink Manufacturers in the UK and Ireland

61 (70) Lakeland Dairies £340.9m 62 (63) Bernard Matthews Holdings £330.5m 63 (62) AarhusKarlshamn UK £325.2m 64 (65) Weetabix 65 (68) Burton’s Foods 66 (69) Uniq 67 (64) Faccenda Group 68 (72) Icelandic Group UK

1,300 people Although a small deal by Blackstone’s standards, the move is a further indication that private equity firms are now chasing a variety of opportunities while large leveraged buyout activity remains restrained.

Source: KEY NOTE, company accounts. * operating profits. Eur = £0.85. Figures in brackets indicate previous year’s rankings.

FOOD & DRINK BUSINESS EUROPE, JUNE 2011

17

Growing Consolidation Rabobank predicts that the private/own label food sector will continue to increase market share because of greater consolidation by retailers, increased consumer acceptance of private label after emergence from recession and further expansion by the hard discount sector. A-brands will still be important for retailers in establishing price levels for different categories and in providing consumers with choice and familiarity.

Paul Moody, chief executive of Britvic.

due to the comparison with the extremely tough trading conditions of 2009, which coincided with the height of the international financial crisis and deep economic recession.

Recovery is, however, fragile with consumer confidence still weak in the UK and Ireland, due to the impact of austerity measures and high unemployment. Most of the companies posting results this year express concern about volatile and escalating raw material costs. Another common theme is the continued focus by food and beverage manufacturers on driving operational efficiency and accelerating innovation across all markets.

The severity of the current economic recession is likely to have long-term consequences for food manufacturers. In the past, consumers have turned to private/own label products during times of austerity, only to return to branded products when the economic climate improved. However, this time will be different.

TOP 100

Company

81 (85) Barry Callebaut Manufacturing

Smaller secondary brand (B-brand) producers will be squeezed from both sides and will have to strategically reposition to survive.

B-brands suppliers will either have to invest in quality and target the premium market, or specialise in private label, according to Rabobank. Consolidation among private label specialists is consequently inevitable as they strive to achieve the necessary economies of scale to compete effectively. J

Food and Drink Manufacturers in the UK and Ireland

Turnover Pre-tax Profits Ownership/Status

£192.9m £1.4m

Barry Callebaut, Switzerland

82 (95) JW Galloway 83 (87) McCormick UK 84 (-) Wrigley Company 85 (-) Dr Oetker UK 86 (89) Yeo Valley Group 87 (92) Lactalis McLelland 88 (90) Dale Farm

£189.3m £5.5m

Independent

£186.9m -£4.0m

McCormick, US

£183.7m £44.7m

Mars, US

£181.6m -£5.3m

Dr Oetker, Germany

£176.6m £5.8m

Independent

£171.4m £2.9m

Lactalis, France

£170.7m £2.2m

United Dairy Farmers Group

89 (88) Finsbury Food Group £168.3m 90 (93) William Jackson & Son £165.4m 91 (83) First Milk Cheese Company £164.6m 92 (98) Ferrero UK £159.1m

£4.8m

plc

£0.08m

Independent

-£5.4m

First Milk Co-op

-£0.2m

Ferrero International, Switzerland

93 (96) Cumbrian Seafoods 94 (-) Tangerine Confectionery Group

95 (94) Daniel Thwaites 96 (99) Yoplait UK 97 (-) Tayto Group 98 (-) Zetar 99 (100) R&R Ice Cream UK 100 (-) Baxters Foods Group Benoit Testard, chief executive of United Biscuits.

18

£155.5m £2.7m

Independent

£154.5m -£0.4m

Independent

£135.2m £1.0m

plc

£133.0m £17.5m

Yoplait, France

£133.0m £4.4m

Independent

£131.9m £5.9m

plc

£130.9m £21.4m

Oaktree Capital, US

£129.1m £6.7m

Independent

Source: KEY NOTE, company accounts. * operating profits. Eur = £0.85. Figures in brackets indicate previous year’s rankings.

FOOD & DRINK BUSINESS EUROPE, JUNE 2011

National Flexible Gets Bigger ‘Down Under’ ustralian-owned Sargents Bakery has A commissioned bakery film specialists National Flexible as supplier of the printed films used to pack its rapidly expanding range of baked fruit pies and tarts.

Established in 2007, the UK presence of Sargents has seen continued growth in a market hungry for new products. With several supermarket listings, the Doncaster baker of premium high quality fruit pies and tarts has opted to work with National Flexible – which is well known for its experience in dealing with the fast-paced packaging demands of the major retailers.

Approved as print suppliers to a host of

big-name retailers including Asda, M&S, Morrisons, Tesco, Waitrose, Sainsburys and many other FMCG manufacturers, National Flexible was well placed to offer

the level of service, quality and reliability needed to keep Sargents packing lines running to schedule.

National Flexible is the UK’s largest distributor of polypropylene, laminates and special films. The company’s custom factory is purpose built to be compliant with the latest BRC standards for food-grade packaging, and it has established itself as the preferred supplier of packaging films for the food, bakery, snack, confectionery and contract packing industries. For further information contact National Flexible on Tel +44 (0)1274 685566 or visit www.nationalflexible.co.uk. J

Mercury Packaging Demonstrates Commitment to Environment ercury Packaging has invested in a state-of-the-art Solvent Abatement Plant to M manage and reduce the emissions produced as a result of its printing activity. As one of Europe’s leading flexible packaging manufacturers and printers for the food, publishing, fulfilment, retail and security markets, Mercury Packaging is committed to reducing its carbon footprint and the impact that its business has on the environment.

Tony Stanger, managing director of Mercury Packaging says: “We take our environmental responsibilities extremely seriously and, as a result have invested heavily in an EZ Air Pollution system from Italian company Ecociprea.”

The EZ Air system purifies the air polluted by VOCs (volatile organic compounds such as solvent vapours) emitted during the print process and will allow Mercury to generate warm air which they can redirect back into the building, with the intention of reducing their heating costs in the future. For further information contact Mercury Packaging on Tel +44 (0)1623 759600 or visit www.mercury packaging.com. J

Faerch Plast Aims to Take a Bigger Slice of the Food Packaging Market ith a growing trend among food proW ducers to package sliced meats in more exclusive trays in a bid to create

life by preserving freshness. Suitable for use at temperatures between –40 C and +70 C, the APET trays could be used to package a wide variety of foods from bakery and confectionery to dairy and salad products.

The APET thermoformed trays can either be sealed with lids or packed in sealed bags, which may be opened and closed repeatedly by the consumer, helping to maintain the freshness of the contents in the refrigerator.

For further information contact Faerch Plast on Tel +44 (0)20 8254 2300 or visit www.faerchplast.co.uk. J

greater visual appeal for consumers, leading supplier of high quality plastics trays and containers for the food industry, Faerch Plast has developed a range of APET thermoformed trays ideal for sliced meats.

APET’s clarity helps to signal transparency, trustworthiness and quality to the customer, while its highly effective barrier qualities are ideal for products such as sliced meats, helping to extend their shelf 20

FOOD & DRINK BUSINESS EUROPE, JUNE 2011

I RETAIL READY PACKAGING

DS Smith Packaging Making Ideas Happen S Smith Packaging, working closely D with leading fmcg brands, is showing the world just how flexible the corrugated pack can be, able to adapt to specific products and supply chains in such a way that very substantial reductions can be made in costs and carbon. Retail ready packaging, already a dynamic and fast moving area, has been given even more momentum through the launch of DS Smith Packaging’s R-Flute®, a new type of corrugated fluting designed to help customers sell more, reduce supply chain costs and operate sustainably.

Benefits to customers working with DS Smith Packaging are widespread, from minimising material use to boosting sales.

Here are a few examples.

R-Flute® has helped to achieve significant savings in cost and carbon for Kellogg’s Nutri-Grain range. A previous competitor pack, produced in C-flute, was reported to look ‘washed out’. The new R-Flute® pack now stands out on the shelf far more, as well as being easy to find back of store, helping to drive onshelf availability. The change to R-Flute® has reduced Kellogg's pallet movements by 911, equating to a massive 24 full loads less per year. Overall that is a saving of 22 tonnes of C02 pa.

has won numerous packaging awards for its innovative ideas. Two packs have been recognised with Worldstar awards, clear recognition of their world-class qualities.

One of them went to a Vitacress pack and the other to a very distinctive Surf Seeds retail ready pack manufactured for Enviropak Supplies Vitacress, one of Europe’s leading growers of watercress, required a packaging design that would remove cost from their supply chain and help maintain the quality of the product in distribution. The result was a design that allows ice to melt cold water over the watercress. A drain tray containing ice sits on the top of the pack supplied allowing melting water to drain over the watercress. A moisture resistant film is laid on the inside of the pack and a thermal PE liner on the outside. The pack replaces expanded polystyrene, has stimulated a significant increase in sales and reduced inbound shipments tenfold.

Following a full review of the previous Surf Seeds pack design, a low-sided tray with two fittings and shrink-wrap, the DS Smith Packaging team recognised the need for something visually distinctive on shelf. The new ShelfMaster one-piece, two colour printed pack is made in a double E-flute corrugated board with an ‘exposed fluted’ internal liner that incorporates an auto-crash base and an integral central divider. Both elements of the design mean that the product is held securely within the pack when open on the shelf. This award-winning pack performs well in the supply chain, ensures product stability and looks great too! It has eliminated the need for shrink-wrap and is 100% recyclable.

Nutri-Grain - saving 22 tonnes of CO2 pa.

DS Smith Packaging recommended RFlute® to Lincolnshire Herbs, changing their packaging from standard B-Flute with opening tape, to a single material retail ready format. The new perforated pack forms squarely, opens reliably and optimises board strength. It has enabled 10,200 more packs inbound to be stacked in each lorry.

Award Winning Over the past year DS Smith Packaging

Surf Seeds - a Worldstar award winner.

At the UK Packaging Awards in November the award for Retail Ready Pack Of The Year went to DS Smith Packaging FOOD & DRINK BUSINESS EUROPE, JUNE 2011

for its Cadbury Caramel Nibbles display pack. The judges felt this pack was “a perfect example of how RRP benefits the brand, supermarket and, importantly, the consumer” giving the products maximum visibility and impact on shelf.

Retail Ready Pack of the Year.

Promoting Brand Values Impact and use of colour on packaging to promote brand values has always been a top priority for DS Smith Packaging. RFlute® has opened up new print possibilities due to a profile that is flatter and better than B-Flute’s. A good example of this is a robust and colourful pack for Calypso Soft Drinks. The impressive Eric the Elephant pack, post printed in five colours, has also benefited from the use of DS Smith Packaging’s unique PackRight suite of tools. DesignRight ensured that the pack was engineered to meet the rigours of Calypso's automatic packing lines and extended supply chain.

ImageRight, in combination with RFlute’s® flat print surface, gave the finished pack an outstanding colourful and vibrant impact, with precise matching of all the brand colours.

In the 2011 EFIA print competition the Calypso pack was just one of thirteen awards collected by DS Smith Packaging, who also picked up two gold awards for Brabantia and Cadbury Caramilk Secrets.

Tony Foster, Sector Director at DS Smith Packaging, says: “It's very rewarding working with customers to improve their supply chains whilst at the same time, helping them to promote their brands. It’s about saving them cost, reducing CO2 emissions and increasing their product sales. We want to do much more of it! Interested brand owners should talk to us about visiting our Impact and Innovation Centre at Ely (IIC) – we MAKE IDEAS HAPPEN.” J 21

I DAIRY

Dairy Crest Well Placed to Face Challenges Ahead Dairy Crest is continuing with its strategy of building leading positions in branded and added value markets, while focusing on cost reduction and efficiency improvements. lthough turnover slipped by 2% to £1.61 billion for year ended March 31st 2011, Dairy Crest managed to increase adjusted profit before tax by 5% to £87.6 million in challenging trading conditions. Profit before tax remained static at £77.8 million.

In line with its development strategy, the UK dairy group again increased added value sales and its five key brands all performed well.

The dairy group also grew sales of milk to major retailers by 9% during the year and started to supply liquid milk to Tesco.

A

Spreads Dairy Crest’s spreads business, which holds strong market positions in the UK and France, proved resilient during the year with revenue of £285.5 million, profit of £53.3 million and a segment margin of 19% - all similar to the previous year. Dairy Crest broadly maintained its market share with a good performance by its three key brands, Clover and Country Life in the UK and St Hubert Omega 3 in France being offset by lower sales of secondary brands. The current tough economic environment has led to increased expenditure on advertising and promotions and to drive innovation.

Mark Allen, chief executive of Dairy Crest.

costs that it has to pass on to customers and consumers.

Dairy Crest’s continued focus on efficiency includes efforts to make the UK spreads business more efficient; the installation of two new biomass boilers and further planned renewable energy projects at the Davidstow cheese plant; and continuation of the £75 million capital expenditure programme at the liquid dairies.

“Dairy Crest’s results for the year demonstrate the benefit of being a broadly based business. A strong performance from our branded spreads and cheese businesses has more than offset tougher trading in dairies,” remarks Mark Allen, chief executive of Dairy Crest. “We have also been successful in making cost savings across the business to reduce the effect that commodity inflation is having on our customers and consumers.”

He adds: “Against a background of higher input costs and increasingly cash-constrained consumers we will continue to focus on doing the right things for long-term benefit, including making efficiency improvements and investing in the long-term health of our brands and facilities. We are soundly positioned to deal with the challenges ahead.” J

Cheese Dairy Crest owns the leading cheese brand in the UK, Cathedral City, and has developed a world class supply chain to support its cheese business. Cathedral City is made at the Davidstow creamery in Cornwall from milk supplied by around 400 local dairy farmers. The cheese is matured, cut and wrapped at Dairy Crest’s purpose-built facility in Nuneaton from where it is despatched to retailers.

Although reported cheese revenue fell by 14% to £223.1 million, this was due to the sale of a majority stake in Wexford Creamery in June 2010. Revenue excluding Wexford increased slightly in the year.

Segment profits increased by 66% to £28.0 million resulting in a segment margin of 13%, up from 7% in 2010.

Dairies The dairies division processes and delivers fresh conventional, organic and flavoured milk to major retailers, ‘middle ground’ customers and residential customers. Reported revenue increased by 1% to £1.09 billion during the year. However, in an increasingly tough trading environment, segment profit fell by 22% to £27.1 million, resulting in a segment margin of 2.5%.

Cost Reduction Dairy Crest delivered £20 million of annualised cost reduction initiatives during the year and has identified a further £20 million for 2011/12. The focus on efficiency has allowed Dairy Crest to invest more in marketing and innovation and limit the increase in input 22

FOOD & DRINK BUSINESS EUROPE, JUNE 2011

I TRACEABILITY

New Tool From Lawson Software to Help Address Global Compliance and Traceability Regulations awson Software has announced the genL eral availability of Lawson M3 Graphical Lot Tracker, a pre-configured supply chain traceability solution. Designed for rapid implementation and ease of use, the new solution can help food and beverage companies gain greater control over food supply chain safety and quality and help them address compliance and traceability regulations introduced by US and European regulatory agencies.

Lawson M3 Graphical Lot Tracker is an enhanced version of the previous Lawson M3 Trace Engine. It helps improve supply chain visibility and helps food and beverage producers track production processes from raw materials, through production, and to the point of sale. It can also help companies manage potential product recalls, which can ultimately help protect their brands during a crisis. Designed primarily for the food and beverages industry, Lawson M3 Graphical Lot Tracker can also be used in manufacturing and fashion environments where companies need to track and trace the links between different lots in their various supply chains.

Powerful Search Capabilities This latest offering from Lawson includes powerful search capabilities to help companies quickly trace backwards to identify potentially tainted raw material lots - or forward to determine the potential scope of

online access to traceability data, which can help build trust and confidence in a company's products and brand. product or safety issues. Customer recall lists can be generated to identify affected end-products. In addition, ‘lots in stock’ reports identify products remaining inside an organization's supply chain with the option to stop the product lots from fur-

ther delivery. A grouped search function makes it possible to search multiple and combined product lots at the same time, which can be helpful when processing a large number of lots or conducting root cause analysis.

To assist with crisis planning, Lawson M3 Graphical Lot Tracker allows companies to create ‘what if’ scenarios, so they can simulate, test and audit likely scenarios before they happen. This dry run capability can help companies identify inefficiencies and gaps in their processes and helps prepare them for real-life situations before it's too late.

Product Quality and Brand Protection “Food companies and consumers alike are much more aware of product safety issues today, which is driving greater need for traceability and product safety capabilities in the production and distribution of products,” says Patrik Sjoberg, director of product management at Lawson.

“Traceability, transparency and trust are critical for companies to retain their market position and protect their reputation. In the age of globalization, goods are moving quickly across borders and through complex supply chains, so traceability are getting more challenging. Lawson M3 Graphical Lot Tracker provides enhanced capabilities that can go beyond simple tracking and tracing, ultimately helping our customers focus on product quality and brand protection.”

Lawson Software’s solutions include Enterprise Financial Management, Human Capital Management, Business Intelligence, Asset Management, Enterprise Performance Management, Supply Chain Management, Service Management, Manufacturing Operations, Business Project Management and industry-tailored applications. For further information visit www.lawson.com. J

Streamlining Audits In addition to supporting reactive recalls, Lawson M3 Graphical Lot Tracker can help companies streamline audits by providing proof of safety procedures, product quality, and sourcing strategies. An intuitive web-based user interface helps simplify use for internal and external parties. Regulators and key-customers can have FOOD & DRINK BUSINESS EUROPE, JUNE 2011

23

I CASE STUDY

Aunt Bessie’s Plumps For Preactor APS and QAD ERP Recipe art of the William Jackson Food P Group, a family business since 1851, the Aunt Bessie’s brand is fast growing and hugely popular with more than half of UK households buying its products every year.

Launched in 1995, Aunt Bessie’s currently produces over 20 million Yorkshire Puddings alone per week at the company’s Hull facility.

In addition to Yorkshire Puddings, Aunt Bessie’s supplies all the major food multiples with a wide range of frozen and fresh sweet and savoury products in a variety of serving sizes.

Planning and scheduling is a vital ingredient when producing for household names on such a scale, which is why Aunt Bessie’s chose to invest in a winning partnership of Preactor APS and QAD ERP. Challenges While the products that the company makes are not complex in and of themselves, their sheer scale and variety combined with a high seasonality of demand create a significant interconnected series of challenges. Starting with raw ingredients such as oil and flour, these are all held on site and ordered in bulk but used at very different rates, depending on seasonality. For example, a 20 tonne container of oil may last up to 2 weeks in quieter periods yet need replacing after only 2 days in busier times. Packaging materials such as cartons, film and outer wrappings are of course subject to the same seasonality but these are held in a small holding store and then brought in on a day before basis.

Aunt Bessie’s operates on a ‘produce on Day 1 for delivery on Day 2’ basis but given that a significant percentage of the company’s products are frozen, it makes use of a third party warehousing facility to maintain 3 weeks of stock across its product range to help smooth supply.

In terms of actual production, Aunt Bessie’s is split into 2 zones. Zone 1 is dedicated to Yorkshire Puddings, Pancakes and Toad-in-the-Hole production and comprises 3 static and 2 gyro lines. In its simplest frozen form, the raw ingredients are deposited onto an appropriate tray before 24

being packaged and wrapped. Where items need to be baked, the raw ingredients are baked and then packed before being frozen (if required) and dispatched.

Zone 2 is much more complex and while it only handles 20% of the product range, it creates 80% of the difficulties. This is largely due to the variety of potential products made here – from stuffing and dumplings to pies and crumbles – and the compatibility (or not) of these products being able to be made at the same time.

Planning and Scheduling Chris Buckle is Supply Planning Manager at Aunt Bessie’s and he outlines the crux of the company’s planning and scheduling challenges. “At the heart of our business is the need to balance inventory management with smoothness and efficiency of production. Each has significant cost implications if we get it wrong.”

FOOD & DRINK BUSINESS EUROPE, JUNE 2011

He goes on to explain why this is the case: “When it comes to inventory, most of our products have a 12 month shelf life yet the major multiples will only accept products with at least 9 months shelf life remaining. In reality this means we have a 12 week window in which to make and sell exactly the right amount of product.

If we make too much it leaves us with product we either have to discount or discard. If we make too little then the customer goes without. Ideally we need therefore to work on a Just in Time (JIT) basis. However, to get the best from our production facilities we need a smooth flow of product through the factory which ideally means batching as many orders together instead of making many smaller orders.”

This is not just down to managing complex set-up, clean down and change over times but because many products cannot physically be produced at the same time.

For example, large lemon meringue pies cannot be run at the same time as smaller ‘for two’ versions of the same product.

Apples & Custard ‘for two’ versions cannot for example be run at the same time as any other ‘for two’ versions of any other product.

Chris Buckle continues: “This scenario is repeated time and time again so in many cases it can take a huge amount of time just to work out what product is actually compatible with another while also taking into account the peaks and troughs of our seasonal demand, shelf life of raw materials, and accuracy of the final amount of product we actually need to make.”

It is not just production capacity that needs to be most efficiently used, the company’s 180 strong workforce also needs to be effectively managed.

Forecasting, Planning and Scheduling Unsurprisingly, forecasting, planning and scheduling are at the heart of Aunt Bessie’s business. The company uses Futuremaster for its long term forecasting solution which gives a rolling 12 month forecast based on historical sales and consistently reviewed data from sales promotions. This is updated

on a monthly basis.

Prior to investing in Preactor, mid to short term planning was handled by a combination of the company’s aging SKEP planning system and MFG Pro Enterprise Resource Planning (ERP) system. Chris Buckle describes the planning capabilities of SKEP as very straight forward showing at best a crude weekly plan. “Not only did we have to manually work out the detailed daily planning information, we had to manually enter this into the ERP system, and then enter it into a huge planning spreadsheet as well as the weekly plan. In addition to this being a very time consuming process, we were left with no real visibility of what was actually happening with actual production versus the manually projected plan.” This meant if a problem did occur, the company wouldn’t know about it until the following day when it would have to react to a day old problem along with all the knock-on effects this had created.

Aunt Bessie’s was already growing concerned about the age, reliability and unwieldiness of its SKEP system when a decision was taken to replace its existing ERP system with a more modern QAD solution. Chris Buckle adds: “This was a key driver for us towards Preactor because in addition to worries about the consequence of a system failure with SKEP, we wanted a modern planning and scheduling solution that would work smoothly with QAD.” A visit to a sister company, Ardo Foods – a long time Preactor user, confirmed the fact that Preactor had all the functionality Aunt Bessie’s required.

Implementation A decision to invest in Preactor and work with long established Preactor partner Kudos Solutions was therefore taken with

implementation beginning in 2010 alongside the company’s QAD system.

One of the biggest problems Kudos had to work on was preventing Preactor from becoming overloaded when back filling by volume, an essential requirement that allows Aunt Bessie’s to smooth production peaks and backwardly allocate production to alternative quieter periods. In parallel the twoway Preactor for QAD adapter interface was installed by Pete Seabrook of MPS Associates and linked to Aunt Bessie’s Eagle Shop Floor Data Collection (SFDC) system.

The QAD/Preactor system went live in September 2010 and experienced only a very few teething problems which were quickly dealt with and overcome.

Now Aunt Bessie’s has 3 distinct yet interconnected plans to help it achieve the best balance between managing inventory and achieving production efficiency. Short-term planning now provides detailed information for a rolling 5 week period where every product is in the correct order along with the associated running pattern and production group information.

Mid-term planning extends from 5 weeks out to 13 weeks and contains all the correct products but not necessarily in the correct finalised sequence. This is done at the short-term planning stage. Long-term planning has taken the longest to achieve but now the company has a rolling 12 month forecast/plan which is so accurate and brings such visibility that contract materials purchasing can be based on it bringing the company better value contract pricing while also ensuring it only orders the raw materials it needs.

Increased Visibility This increase in visibility is a consistent benefit across many areas of the company as well as at an overall business level, as Chris Buckle explains: “In many ways, Preactor is already helping drive process change within the company about how we best run the lines. Without Preactor, the questions we are now asking might not have been asked because we wouldn’t have been aware of the possibility of improvements.”

He continues: “The increased visibility from Preactor has also helped us to respond quicker in a number of ways, especially when we have a problem on a line. Before, it could FOOD & DRINK BUSINESS EUROPE, JUNE 2011

take a day to even notice a problem and then additional time to work out how best to react. Now we can see much quicker when a problem occurs as well as investigate various different scenarios for dealing with it.”

Other Benefits Perhaps the most significant benefit is the change in attitude towards planning that Preactor has brought. “Now we are focussed not on ‘can we make it’ but ‘how can we make it better’,” explains Chris Buckle. “The emphasis previously was on satisfying orders whereas now we can not only see the associated costs at each stage of the plan but take these into account when deciding what to do. This helps go a long way towards achieving our requirement to balance our inventory management with our production efficiency.”

While still in the early days of using Preactor with QAD, Chris Buckle knows there is much more to come. There are already plans to implement labour planning into Preactor which will further help smooth production spikes as well as plans to fine tune the capacity planning capabilities currently being used.

The company is also considering breaking the short term plan down into 3 shifts per day so that each shift can see the exact status of where actual production is compared to the plan. Using Preactor to help plan the packing requirements of the business is also being investigated. It is no wonder that Chris Buckle concludes: “Preactor has brought unknown levels of visibility to Aunt Bessie’s. Even at a business level, Preactor is starting to bring the Planning and Operations functions together and as each sees the impact of decisions by the other, it is telling us more than ever how best to run our lines and in turn, our business.” J

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Big Packaging Solutions For a Small World

By Patrick Cookland, STV Packaging UK here are few businesses these days that can T claim a 100 year history, even less who have retained their independence and established themselves as an identifiable high street brand. Congratulations are surely well earned by Thorntons PLC as they celebrate their 100th Birthday!

Like countless other children in the UK, I remember the Birthday or Christmas excursion to Thorntons, fully aware that these special occasions deserved a special treat. It is a tremendous achievement to know that we can still rely on Thorntons to provide us with that special gift for that special occasion.

Here at STV Packaging in both the UK and Germany we are delighted to play a small part in the continuing success of Thorntons PLC. In 2010 when looking for packaging to emphasise the quality of the Mini Reindeer, Snowman and Santa Christmas models we were able to provide the best possible solution. Thornton’s design team created beautiful seasonal images, confident that our years of experience printing and converting crystal clear PET would ensure the best possible

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packaging to support their quality products.

Utilising 60% recycled content PET, manufactured by our sister company Folienwork Wolfen ensures best possible

FOOD & DRINK BUSINESS EUROPE, JUNE 2011

material lead times and cost consistency.

Converted on state-of-the-art print machinery using low migration inks, finished on our unique creasing machinery, carefully glued in a BRC/IoP certificated Factory, with years of experience focused on complete customer satisfaction ensures Seufert Transparente Verpackungen are one of Europe’s leading manufacturers of clear packaging, and allow us to provide the premium quality packaging that the premium quality confectionery created by Thorntons PLC certainly deserves.

In 2010 we were entrusted with a range of developments by Thorntons PLC which required creative, innovative solutions – not least the encapsulated Glitter print on the Chocolate Dipping Set. This allowed for cost reduction replacing Foil Blocking but ensured the packaging retained a premium appearance. We like to think that at Seufert our breadth of knowledge allows us to provide such solutions and help ensure cost effective quality packaging.

Here’s to 100 more years! J

I CONFECTIONERY

Challenging Times For Thorntons Thorntons, the UK confectionery manufacturer and retailer which is currently celebrating its 100th anniversary, is facing a very challenging period ahead as it seeks to reshape its business to meet changing market demands. stablished by Joseph William Thornton in 1911, Thorntons has developed into a £200 million-plus turnover company with more than 370 shops and cafes and a franchise estate of over 220 stores across the UK and Ireland together with internet, mail order and commercial services. Using the strapline - ‘chocolate heaven since 1911’ the Thorntons business has been built on bringing luxury chocolate to the high street. However, the company has struggled in more recent times to adapt to the modern retail environment.

The group has been hit by fragile consumer confidence on the high street and by unprecedented weather conditions, which impacted on its important Christmas and Easter trading periods. Thornton’s retail business, comprising its own stores and cafes, franchise business and Thorntons Direct, the company’s online corporate and consumer delivery service, generates about two-thirds of group turnover. Its sales and operations division, incorporating commercial sales (chiefly to supermarkets), accounts for the remaining third.

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Dwindling Profits Thorntons recently warned that poor trading over the important Easter period coupled with the ongoing challenging retail environment will result in profit before tax and additional impairment charges for the year to June 25th 2011 being in the £3.0 million to £4.5 million range, significantly below the £6.1 million achieved last year.

Indeed, the previous year’s figure was down by 2.4% and revenue was flat at £214.6 million, as sales through it own stores declined, particularly in the second half, and the trend has continued into the cur-

rent year.

In its third quarter trading update, Thorntons reveals that while overall group sales since January were down slightly by 0.7%, the hot weather conditions over the Easter trading period significantly impacted its own stores, franchise and Thorntons Direct channels. Although its two key trading periods, Christmas and Easter, have

been affected by the weather, total sales for the year to date increased by 2.9% compared to the same period last year.

Changing Strategy “The past quarter has been extremely challenging particularly in our own stores and for franchisees and we foresee the prospect of this weakness in high street footfall and spending continuing. We have taken a number of actions including adjusting our trading strategy and aggressively managing our overhead costs, as well as ensuring that our production is geared to likely demand,”

FOOD & DRINK BUSINESS EUROPE, JUNE 2011

comments Jonathan Hart, new chief executive of Thorntons. The confectionery group is now in the process of a strategic review of its business to determine ways of meet these challenges. Indeed, a significant number of the group’s shop leases are approaching renewal, which will provide an opportunity to change the size and shape of the own store portfolio.

Jonathan Hart, who became chief executive at the start of 2011, was appointed to restore Thorntons’ flagging fortunes. He has more than 25 years of retail and consumer goods experience. He was previously managing director of UK coffee chain Caffe Nero for five years, during which time the business more than doubled in size to over 400 stores with EBITDA of £28.7 million and revenue of £153.6 million (year to May 2010). In addition to driving top-line growth and physical expansion, he streamlined retail merchandising, built the Caffe Nero brand equity and improved company profitability. He will be expected to emulate this success at Thorntons.

Dilemma Although Thorntons’ own stores, franchise and Thorntons Direct channels have come under pressure in recent times, a redeeming factor is that, in spite of the difficult trading environment, sales of Thorntons branded products are still growing. Thorntons faces the dilemma of how to rebalance its business, by restructuring its retail business (own store and franchise) while increasing sales through other commercial channels, but still maintaining the strength and integrity of the Thorntons brand, which has chiefly been developed through its retail presence on the high street. J 27

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I SOFT DRINKS

Hot Prospects For Lipton Ice Tea To keep pace with surging global demand for ready-to-drink tea Unilever recently upgraded and expanded capacity at its Lipton Soft Drinks facility in Ireland. ipton is the world’s best-known and top selling brand of tea.

Lipton is the global market leader in both leaf and ready-todrink tea, with a market share nearly three times larger than its nearest rival.

Based at Carrigaline in Cork, the Lipton Soft Drinks Ireland factory was built in 1995. It produces Lipton Ice Tea Concentrate, which is supplied to Pepsi Lipton International, a joint venture between Unilever and PepsiCo, also in based in Cork at the PepsiCo Ireland complex in Little Island.

The concentrate kits, consisting of a dry blend of the proprietary raw materials required to produce Lipton Ice Tea, are distributed to the Pepsi bottlers around the globe where water, sugar and acids are added to make the finished product.

Through Pepsi Lipton International, Lipton Soft Drinks Ireland supplies RTD tea concentrate kits to the Pepsi bottling network throughout the world, with the exception of North America and Japan, which are managed as separate businesses.

L

Pictured (left to right): James Heath, factory manager of Lipton Soft Drinks Ireland, and Hans Synhaeve, vice president supply chain, Savoury and

Global Leader Pepsi Lipton International was established in 2003 for the marketing and distribution of Lipton RTD Tea in selected international markets. The joint venture combines the complementary strengths of Unilever's Lipton brand and tea expertise with Pepsi’s international bottling and distribution network.

The alliance between Unilever and PespsiCo has enabled the Lipton brand to accelerate its growth by building on its leadership of the global RTD tea market. The partnership has also allowed Pepsi to augment its portfolio of healthy refreshment beverages with the addition of the Lipton Ice Tea brand.

The joint venture was expanded in 2007, adding a further 11 countries to the partnership's existing Lipton ready-to-drink tea business and effectively doubling its volumes. The business in these countries – eight in Europe (Germany, Italy, France, Netherlands, Switzerland, Austria, Belgium and Portugal) as well as Korea, Taiwan and South Africa - had combined systems sales to the trade of around Eur300 million in 2006. The new agreement effectively completed the original partnership and created the world’s leading ready-to-drink tea business.

The recently upgraded and extended Lipton Soft Drinks facility in Ireland.

Beverages Europe, Unilever, who opened the new premises.

Eur2.2 Million Investment The refurbishment and extension of the Lipton Soft Drinks Ireland factory commenced in March 2010 and was completed by the end of the year. The Eur2.2 million investment programme has increased capacity and flexibility while improving overall efficiency and the safety and working conditions of employees.

“The refurbishment and extension project has allowed us to increase output by 18%; lower the risk of injury and has provided better facilities for personnel,” says James Heath, factory manager of Lipton Soft Drinks Ireland. “We are now better placed to be able to service the growth that is projected for Lipton Ice Tea.” The project involved the enhancement of staff amenities following the building of new offices, changing rooms and canteen.

Within the production area, the manual handling systems have been redesigned through the introduction of a Liftrite system, and the dust extract system and filling and packaging operations have been fully upgraded. Safety procedures have been further tightened by the improved segregation of fork lift trucks and factory personnel. The production areas have also been completely fitted out with clean-room panelling by Asgard.

“The manual handling system developed by Liftrite in close cooperation with our production manager Fergal Moloney is very unique and gives us total flexibility on how to set up our batching operation. Indeed 90% of manual lifts have been removed,” James Heath adds.

The first phase of the project involved enabling external works such as the relocating of services and the introduction of a new drainage system, and culminated in the installation of the new office block (a 10 unit Masterkabin structure) which was assembled onsite in one day, with staff moving in four weeks later.

All the internal work, including moving stairs and civil work for dock levelers, was carried out during the second phase of the project and this was followed by a three weeks shut down in November/December 2010 when all the process changes were completed.

MMD Construction was the main contractor and RPS was the

FOOD & DRINK BUSINESS EUROPE, JUNE 2011

29

consulting engineer on the project.

MMD constructed a number of elements for Lipton including full refurbishment of the existing building, extensive site-works, dock-levellers, offices and storage buildings. All works were completed within a live manufacturing environment. Using MMD’s Safety & Quality Management System certified by ISO 9001/OHSAS 18001 and Safe-T-Cert, a significant safety milestone was achieved with 12,250 accident free hours recorded.

Future Development While the extension to the factory has allowed Lipton Soft Drinks Ireland to meet current growth in demand, additional capacity will be required in the not too distant future. “Ready to drink tea is one of the fastest growing segments of the soft drinks market and Lipton is performing well with strong double digit growth year on year,” points out James Heath. “The investment was seen as a medium term investment and a review will be carried out again within twelve months to plan for the next phase of capacity expansion.” J

Official opening of the new premises.

New Unilever Case Packing Line By Tekpak ekpak has manufactured a semi autoT matic case packing line for Lipton Soft Drinks, part of Unilever. Tekpak’s packaging line designers worked with the Lipton project team to design and manufacture a complete case packing line for iced tea concentrate with safety, efficiency, quality and simplicity at the core of the design process.

Ergonomics were a top priority and the Lipton project team, including Unilever’s own Health and Safety expert and machine operators, worked with Tekpak’s in house quality manager and project team to customise the line with the operators in mind.

“Liptons are a great example of how a collaborative approach can achieve the best results for the company and its people they are a fantastic company to work with,” comments Imelda Kehoe, quality manager at Tekpak.

The full line, incorporating an Imball Case Erector, case packing station and Imball Case Closer, has the following features: 30

• Throughput – 15 cases per minute; • Sizes – capable of handling 3 different product and case sizes; • Quality – enables inspection of product bag integrity with built in features to HMI; • Technical - All electronic parameters are

FOOD & DRINK BUSINESS EUROPE, JUNE 2011

automatically set up when the operator selects the box size product on the HMI colour touch screen; • Motion controlled system using brushless servo motors; • Stainless steel suitable for wash down environments. J

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BREWING

Repositioned Carlsberg on Track to Meet Targets the right thing,” comments arlsberg Group has started 2011 well not match up to its Jorgen Buhl Rasmussen, and is firmly on track to meet its full- brand recognition.

At the heart of the chief executive of Carlsyear financial targets. In the tradiberg. “Although internationally quiet first quarter of the year, repositioning is a redefintional recognition is good, beer volumes grew by 11% to 23.3 million hl, ition of the brand propoit is not enough. We are net revenue growth was 14% to DKr12.5 bil- sition – a proposition investing significantly in lion (Eur1.7 billion) and operating profit rose which celebrates Carlsthe Carlsberg brand, by 38% to DKr1 billion. However, the com- berg’s heritage and valwidening our distribution parison is distorted by the destocking in Russia ues, while connecting with today’s active, In April, the group launched a new global channels and making every in the first quarter of 2010.

According to Carlsberg, overall beer markets adventurous generation repositioning of the Carlsberg brand with effort to get closer to our customers and consumers.” in Northern and Western Europe declined in of beer drinkers. The the aim doubling its profits by 2015.

Supported by slightly quarter one, and consumer dynamics remain proposition encourages challenging although there are some signs of consumers ‘to step up and do the right thing’, higher marketing investments than in 2010, rewarding themselves with a the group is well on track in the planning and small improvements.

Carlsberg for their efforts executing of the commercial activities that Carlsberg improved and it carries the tagline will deliver the expected profitable market overall market share in ‘That calls for a Carlsberg’. share growth across a large part of the busithe region with particuCarlsberg’s visual identity ness. larly strong growth in has been modernised, distriPoland and South East bution channels are being Outlook Europe and with the UK widened and a completely Carlsberg has confirmed its underlying business continuing to new range of packaging is assumptions and full-year outlook for market strengthen its market currently being rolled out share growth in markets representing twoposition. across more than 140 mar- thirds of its business, high single digit perPerformance of the kets. The changes to both centage growth in operating profit and adjustEastern European busithe brand proposition and ed net profit growth of more than 20%. ness in the first quarter the visual identity are Jorgen Buhl Rasmussen comments: “We are benefited from an designed to help to make satisfied with the group's performance in Q1, improving macroeconomic environment and Jorgen Buhl Rasmussen, chief executive of the Carlsberg brand more while at the same time acknowledging that in consistent, appealing and most of our markets, it is a small quarter. We from distorted year-on- Carlsberg. distinctive to its consumers are particularly pleased that the important year comparisons. in both its established and newer markets.

Russian market has returned to growth. We Global Repositioning “People are familiar with Carlsberg but do continue the efficiency agenda with the In April, the group launched a new global not necessarily know what it represents. This implementation of several large projects in repositioning of the Carlsberg brand with the global launch is our way of getting our story 2011 and, at the same time, a number of aim of unleashing its full potential within the out there to both our mature markets and our commercial initiatives are taking place to coming years and doubling the brand’s profits newer markets. We want people to know that support profitable market share growth. by 2015. While Carlsberg’s famous green Carlsberg beer stands for something – for her- This includes the global repositioning of logo is known all over the world, its sales do itage, for quality, for great taste and for doing the Carlsberg brand.” J

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STORAGE

LOGISTICS

Warehouse Automation at Carlsberg n 2008, Elettric 80 added 22 LGVs to the ICarlsberg two LGVs operating since 2004, at Brewery in Falkenberg, Sweden.

Complete warehouse automation was obtained with minimum disturbances to production. The dynamic automation solution allows modifications whenever required.

The warehouse of Sweden’s largest brewery comprises approx 20000 pallets in block storage, gravity racks and a few single racks.

Ten of the new LGVs can carry either one or two pallets, whereas the others always transport two. Up to 500 pallets per hour are transported, 24/7. The whole storage process, including the regular supply of empty pallets and other consumables is automated.

Though pallet properties vary and weights range from 100 to 1000 kg, the LGVs maintain reliable millimetre precision throughout the whole handling, ensuring enhanced personal safety and minimised product damage.

The flexible system has been constantly updated to meet changes in handling procedures. Elettric 80 also provides an embedded engineer at the Falkenberg plant, who will service the LGV fleet to ensure maximum efficiency.

Kristoffer Andersson, warehouse manager of Carlsberg, says: “The system capacity fulfils all expectations also at production peaks.

We have obtained more stable operation and the handling of pallets from production to warehouse is now considerably more cost effective.” J

FOOD & DRINK BUSINESS EUROPE, JUNE 2011

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PROPAK AS produces a wide range of flexible packaging materials for food products. Within the food sector, the company is focused on chips, snacks, biscuits and cakes, chocolate and wafer, breakfast cereals, dried foodstuff, confectionery and chewing gum products. More than 30% of the company's production is exported to more than 20 countries across Europe, North America, Russia, Africa, Middle East, and Asia.

Regarding our equipment, we have: 3 Rotogravure presses with up to 9 color capability; 3 CI Flexo presses with up to 8 colors and 1 â „2 tone capability; 4 Lamination machines; 8 slitters; and

Pattern Cold Seal applications for Flexo and Rotogravure Laminates.

Please see the company's website, www.propak.com.tr, for further information.

Our Accreditations are : BRC / IOP CERTIFICATE ISO 9001:2000 ISO 14001 ISO 14056 (in process) OHSAS 18001 AIB INTERNATIONAL PROPAK PACKAGING www.propak.com.tr e-mail : sales@propak.com.tr Tel : 0090 751 38 80 Fax : 0090 751 38 85

I SNACK FOODS

Entrepreneurial Drive Powers Largo Foods Privately-owned Largo Foods, Ireland’s largest crisps and snacks manufacturer, is relying on entrepreneurial drive and a capacity for innovation to protect its domestic market share against more powerful, multinational rivals as it seeks simultaneously to carve out niche export sales. stablished by current chief executive Ray Coyle in 1983, Largo Foods controls about 50% of the Eur210 million crisps and bagged snacks market in the Republic of Ireland. Largo Foods employs 450 people, has a turnover in excess of Eur100 million and operates two factories in Ireland. The largest plant, based at Ashbourne in County Meath, produces on average 250,000 kilos a week. The second Irish facility is located in County Donegal and has an average weekly output of 50,000 kilos of product.

The company’s four main brands Tayto, King, Hunky Dorys and Perri – allow it to cover all key market categories and to compete across the price spectrum from economy through to premium.

Well known throughout Ireland, Tayto crisps is by far the company’s biggest brand. Indeed, it is one of Ireland’s top five

Foods also has an English facility at Barnsley, which manufactures about 20,000 kilos a week and specialises in private label production, including premium popcorn products, for the UK market.

There is also a small related unit in Moldova, serving the domestic market there and Ukraine. A fifth plant in Tripoli has been out of action since the start of the war in Libya.

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Ray Coyle, chief executive and founder of Largo Foods.

One of the company’s latest innovations is a range of Wholegrain rice chips, believed to be the first of its type in Europe. The product is available as Tayto Occasions in Ireland and as Wholly Crunch in the UK.

grocery brands. The King crisps brand is aimed at older and more discerning consumers, and is regarded as a ‘connoisseur’ rather than a ‘mainstream’ range. Hunky Dorys is Ireland’s leading crinkle crisp.

Sold in bigger sized packs and with strong flavours, the brand is weighted towards young males (who account for about 65% of sales) and is characterised by its contemporary and ‘on the edge’ marketing and advertising. Perri serves the value end of the market.

In addition to crisps, which account for about 60% of the company’s turnover, Largo Foods also produces extruded products, popcorn and other fried savoury snacks. Roughly 85% of sales are branded, contract manufacturing (including organic snacks in the UK) accounts for about 7% and the remainder is own label production mainly for the Irish market. A quarter of Largo Foods’ sales are generated from exports, principally in the UK. As well as the two Irish factories, Largo FOOD & DRINK BUSINESS EUROPE, JUNE 2011

Innovation Largo Foods has a proven track-record of successful product innovation, which has enabled it to compete both at home and abroad with much larger, multinational rivals such as PepsiCo with its Walkers and Frito Lay brands, United Biscuits (KP) and Pringles (recently acquired by US-based Diamond Foods).

“It does not make sense to try to compete on price. So we have to work on our brands, stress our Irish heritage and keep developing new products,” says Ray Coyle.

“We try and differentiate our product through our branding, through our marketing and through their taste and flavour.”

To cater for more health conscious consumers, Largo Foods has developed Velvet Crunch, a range of low calorie (82 calories per pack) snacks which use 70% less oil and are rated at one Weight Watchers point. At the other end of the scale, Largo Foods also produces an indulgent range of bistro-style crisps.

The largest plant, based at Ashbourne in County Meath, produces on average 250,000 kilos a week.

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by reducing energy costs. The company expects to have its two Irish plants accredited to EN 16001 by the end of 2011. The energy management system in place also covers water and gas. “We are targeting to reduce our energy usage by 10% over the next twelve months,” says John Donnelly.

“We are also planning a major Eur3 million green energy project to convert our waste into energy, and are looking at CHP options combined with either anaerobic digestion or gasification.”

One of the company’s latest innovations is a range of Wholegrain rice chips, believed to be the first of its type in Europe. The product is available as Tayto Occasions in Ireland and as Wholly Crunch in the UK, where Largo Foods does not have the rights to use the Tayto brand name. Largo Foods is seeking to develop its Wholegrain rice chips further through the introduction of new flavours.

A new product about to be launched is Love Bites, which is low in calories and is based on a mixture of rice and maize to produce a distinctive texture and eating quality.

Market Environment Despite the deep economic recession in Ireland, the Eur210 million crisps and snacks market has proved resilient.

Although it declined slightly in 2010, the market has now recovered and is expected to achieve value growth of 3-4% this year, ahead of projected slight volume growth.

“One of the saving graces of our category is that the product is relatively low cost – it does not take a big decision to spend 70 or 80 cents on a bag of crisps, so it is a comfort food. Being a comfort food, more is eaten in a recession and that has been the case over the last fifty years,” he points out.

“So we see a slight increase in our sales because of that.” Of course, during recessionary times, consumers also find comfort in well-established brands, which they have grown up with and feel they can trust, and this is also to the advantage of Largo Foods in the Irish market.

Plant Specialisation The two Irish factories complement each other. In the past Ashbourne specialised in potato-based products, while the Donegal plant made extruded and fried savoury

The highly automated Ashbourne factory concentrates on higher volume products with longer production runs.

snacks. Following capital investment to increase automation at Ashbourne to reduce the cost base in order to remain competitive against its larger multinational rivals, Largo Foods has switched some extruded and fried snacks production from Donegal. The highly automated Ashbourne factory now concentrates on higher volume products with longer production runs, leaving Donegal to focus on niche type products usually with a higher export element.

“We are investing constantly in the region of Eur2.5 million annually in our plants to add capacity where needed, improve efficiency and increase flexibility for new product development,” comments John Donnelly, operations director of Largo Foods. “The complexity in any snack food business comes from the packaging.

We would pack bags from 15 grams in weight up to catering bags of 300 grams and in several types and many sizes of multi-pack. We are always looking at packaging development and we have a very active new product development pipeline.”

For example, at the start of the year, Largo Foods invested £2 million to install a new rice chip line in Donegal. The Donegal factory is now producing Velvet Crunch and Wholly Crunch, which are Largo Foods’ brands in the UK. Niche products such as organic snacks are also made there. Further investment in automation at Donegal is planned.

“There are more opportunities to do business in the UK but the disadvantage we have is that the cost base is too high in Ireland. We are working to overcome that through the introduction of automation.

So the products we sell in the UK are usually ones that are unique, different and have value,” Ray Coyle remarks.

campaigns to revive the iconic ‘Mr Tayto’ brand.

Reviving Mr Tayto Largo Foods embarked on a series of memorable and highly effective marketing and advertising campaigns to revive the iconic ‘Mr Tayto’ brand. The first major campaign – ‘Vote number one for Mr Tayto’, coincided with the Irish General

Largo Foods invests in the region of Eur2.5 million annually in its plants to add capacity where

Largo Foods embarked on a series of memorable and highly effective marketing and advertising

Key Acquisition Largo Foods has developed through a combination of organic growth and acquisitions. For instance, the Perri brand was bought in 1984 and the Donegal-based Irish Snack Foods business was acquired in 1996. The most significant deal, however, was the purchase of the Tayto and King brands for Eur62 million from C&C Group in 2006.

Although the move made Largo Foods, which was already manufacturing the brands for C&C under contract, the brand leader in snack foods in the Republic of Ireland, it faced the urgent task of rapidly reversing the declining fortunes of the Tayto brand, which at one time had held 90% of the Irish crisps market.

“Tayto badly needed a radically different approach and entrepreneurial drive which Largo Foods has been able to provide,” comments John Donnelly.

Green Credentials Largo Foods is also tackling its cost base FOOD & DRINK BUSINESS EUROPE, JUNE 2011

needed, improve efficiency and increase flexibility for new product development.

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allows visitors the opportunity to go behind the scenes to see where Tayto crisps are made via an enclosed walkway constructed above the factory, which incorporates viewing points to the actual production process, along with a host of audio visual material. Believed to be the first facility of its kind by snacks manufacturer in Europe, Tayto Park will help Largo Foods to maintain brand loyalty and to recruit a new generation of consumers.

Elections, and last year Mr Tayto’s biography was launched and eagerly received by the public. The culmination of the ‘personalised’ Mr Tayto campaigns is the recent opening of ‘Tayto Park’, an outdoor visitor centre and heritage park built on land adjacent to the Largo Foods factory in County Meath.

Featuring wild animals, Indian villages and landscaped gardens, Tayto Park is now a local tourist attraction. It also

36

Future Development Largo Foods is targeting ongoing sales growth of between 12-15% per annum but gaining funding to achieve this is proving problematic in Ireland, given the general economic climate and the severity of the banking crisis.

“We should be able to grow our business significantly and still preserve a reasonable bottom line but access to finance is a challenge,” says the Largo Foods founder. Four years ago, Largo Foods sold a 15% stake in the business to Intersnack, one of Europe’s largest snack groups with a turnover of Eur1.5 billion.

Indeed, the alliance with Intersnack has been highly beneficial through the sharing of knowledge and expertise, and allowing Largo Foods access to the German-based snack group’s international distribution

FOOD & DRINK BUSINESS EUROPE, JUNE 2011

network.

Developing further export sales in the UK and Eastern Europe is high on the agenda as is a major push into China.

“The big challenge for us is to develop products, flavours and packaging for the Chinese market. It presents a huge opportunity. Hopefully we will shortly become part of that market, which is showing 15% compound growth per year,” Ray Coyle concludes. J

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ALCOHOLIC BEVERAGES

C&C Group Revival Continues ear-on-year volume growth of 4% for its Magners cider brand, including 3.6% growth in Great Britain and 33.8% export growth, helped C&C Group, the Irish and UK branded alcoholic drinks group, to increase

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During the year, C&C Group successfully integrated and delivered synergy benefits from recently acquired businesses as it continued to build momentum behind the Magners brand in Great Britain.

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operating profit before exceptional items by 17% to Eur105 million in the year ending February 28th 2011. Buoyed by contributions from acquisitions (Tennent’s lager and Gaymers cider), net revenue rose 46% to Eur529.6 million.

During the year, C&C Group successfully integrated and delivered synergy benefits from recently acquired businesses as it continued to build momentum behind the Magners brand in Great Britain; while protecting the Bulmers cider brand’s earnings position in Ireland.

Operating profit in the original cider business increased 9.0% to Eur71.1 million while acquisitions contributed operating profit of Eur29.8 million. C&C Group is now effectively debt free having reduced net debt by Eur359 million to Eur6 million in 2010/11.

“Our principal cider brands, Bulmers and Magners, are in good health. The group’s balance sheet strength and cash generation capability provide us with financial flexibility to invest in the continuing development of our business and to support our brands,” says John Dunsmore, chief executive of C&C Group. “The UK,

John Dunsmore, chief executive of C&C Group.

as the world’s largest cider market, continues to grow and attract new entrants to the category. Magners now enjoys growth and momentum in both the UK and international markets. We intend to protect the strength of the brand with incremental support.”

He adds: “While we have not assumed any pick up in consumer spend within the next twelve months, the shape of our business today should sustain earnings growth.”

C&C Group expects operating profit to grow from Eur100.5m last year to a range of between Eur108 million and Eur115 million for its current financial year. J

AUTOMATION

CenFRA Can Make it the End of the Line For Inefficient Processes enFRA has launched a bespoke machinBy offering a dedicated service to end-of- able to offer completely impartial profesC ery design service exclusively for end-of- line automation CenFRA believes it will sional advice and guidance on the latest line applications to help UK food and drink companies achieve more flexible, accurate and cost efficient packaging solutions.

Although there are already countless off the shelf automation options for end-of-line processes, such as picking and packing, manufacturers often find it difficult to find one that meets their exact requirements.

CenFRA's custom-built design offering allows businesses to affordably explore automated processes and create personalised packaging solutions to suit them.

As manufacturers begin to learn more about emerging technologies, more are turning to bespoke machinery design and an increase in the cost-effectiveness of automated solutions means they can now handle awkward, heavy or delicate items for complex processes such as product classification, printing and wrapping.

help to inspire food and drink manufacturers to look at other processes as well. As CenFRA is totally independent of any one supplier or equipment manufacturer it is

FOOD & DRINK BUSINESS EUROPE, JUNE 2011

robotic and automation solutions available.

With support from leading universities, specialist engineering centres and leading robotic and automation organisations, CenFRA provides an all-encompassing service, which evaluates existing commercial solutions, identifies core function requirements and develops initial concepts through to full automation machine design.

The company's specialist team combine their industry knowledge with technical engineering excellence to develop 3D modelling, component assembly drawing and freeform surfacing using sophisticated computer aided design software to enable rapid development to proof of principle modelling and concept evaluation. For further information visit www.cenfra.co.uk or contact one of CenFRA's engineers on +44 (0)1302 765680. J 37

Kloosterboer and McCain Foods Partnership loosterboer is one of the leading logisK tics providers for temperature-controlled goods in Western Europe. In 2006 McCain and Kloosterboer decided that a partnership would benefit the business and the commercial success of both companies.

Kloosterboer’s lengthy and extensive experience in cold stores and the high quality products produced by McCain proved to be a potent combination for both companies started a project that would eventually result in the construction of one of the largest and most modern automated highbay cold stores (AHC) in Europe.

Kloosterboer Harnes is the most recently established Kloosterboer location. The automated highbay cold store in Harnes was especially designed for McCain based on the company’s logistic parameters. The cold store contains 70,000 pallet spaces and is located next to McCain’s production site.

Kloosterboer takes care of the complete storage, handling and order picking of McCain’s products.

Advantages By building a central cold store, McCain

38

The automated highbay cold store in Harnes was especially designed for McCain.

now bundles its stock which previously was spread over different regional cold stores.

This leads to a considerable reduction in transport costs. Next to direct economical advantages, this contributes to a more sustainable distribution because of the reduction in CO2.

Furthermore, for the construction of the AHC, the most advanced building techniques available in this field were applied.

The energy costs are therefore 45% less in comparison to existing situations in conventional cold stores.

FOOD & DRINK BUSINESS EUROPE, JUNE 2011

Where possible and when economically justifiable, the basic principle in the design is the use of mechanisation and process automation. This leads to significant reductions in operational costs.

Transportation is also managed by Kloosterboer. The transportation (over a distance of 35 km.) between the McCain factory in Bethune and the cold store is done with specifically designed automated trailers. The unloading at the cold store can be done fully automatically in less than 3 minutes.

Kloosterboer also provides the operation of a shuttle connection between the factory and the warehouse. The pallets are loaded directly from the conveyor belt out of the factory into the shuttle without human intervention.

Kloosterboer and McCain worked closely together to define which services should be handled by Kloosterboer to obtain the most efficient integrated supply chain.

Kloosterboer also handles the order picking for outgoing orders, repacking of products and shock freezing of products that need to be delivered quickly. J

I

FROZEN FOODS

McCain Foods Grows Green Credentials McCain Foods, one the world’s leading frozen food companies, is continuing to lead the way forward in terms of reducing its environmental impact and developing a sustainable business model. ounded in 1956, Canada-based McCain Foods employs 20,000 people and operates 50 production facilities on six continents. Still privately owned, McCain Foods generates annual sales in excess of C$6 billion (Eur4.3 billion) and is the world’s largest manufacturer of frozen potato products.

The company also produces a diverse range of frozen products, including pizza, appetizers, oven meals, juice and desserts. Its products are sold to retailers and food service operators in more than 160 countries around the world.

In line with its corporate social responsibility strategy, McCain Foods invests significantly in reducing its environmental impact and carbon footprint while also boosting productivity. For instance, McCain’s manufacturing facilities create a large amount of waste heat, particularly from fryers. The company has invested over C$50 million to implement systems to capture the waste heat produced and recycle it back into the plants to preheat the water required for the boiler systems and other production operations. McCain Foods’ potato processing facilities worldwide now feature this technology which reduces fuel use by 9%.

The Canadian company has been established in the UK since 1965 and expanded into continental Europe throughout the 1970s and 1980s. Employing over 2,000 people across factories at Scarborough, Wombourne, Whittlesey and Hull, McCain Foods GB leads the retail and food service industries in frozen potato products such as French fries, potato specialties, appetisers, and pizza.

F

Green Initiatives McCain Foods GB has invested £10 million in green initiatives at its Whittlesey site, the largest chip factory in the UK. In addition to the introduction of the latest technology to capture waste cooking heat and recycle it to heat water, the Whittlesey site is the first major UK food plant to be powered mainly by wind. Three 125-metre turbines save over 27,000 megawatt hours annually – enough to power around 6,000 homes. At times, they generate over 100% of the plant’s needs and supply the excess to the National Grid.

Waste water at Whittlesey is now pumped to the site’s anaerobic lagoon, where production residues

are ‘digested’ to make gas, which is then used to generate electricity and the water is cleaned and pumped safely into the river. Between them, the lagoon and turbines will generate an impressive 70% of the plant’s electrical power.

Improving Productivity As a direct result of these initiatives, the site now needs 9% less energy to produce a kg of food compared to 1999. Indeed, McCain Foods is determined to continue to make food production even more efficient on the basis that it is not only good for the environment but it also good for business.

In Great Britain, McCain Foods has also been reducing customer miles through the use of double-decker transport trucks, which enable more efficient delivery through increased loads. An additional benefit of these trucks is their inclined roof, which results in a further 12% fuel-efficiency improvement in addition to the double loads.

In response to the growing consumer interest in ‘healthy eating’, McCain Foods has been reformulating its products. For example, in the UK it has reduced salt in its foods by 18% and saturated fat by over 70% in the last six years. McCain Foods was also one of the first UK manufacturers to introduce traffic light labelling on its packaging, to provide consumers with a quick, straightforward way to check the nutritional value of products.

Savings in Logistics McCain Foods has also been centralising logistics and focusing on route management throughout its global business with the objective of reducing both cost and road miles to customers. In the US, McCain has reduced the number of its cold storage warehouses by two-thirds through centralisation.

In Harnes, France, which is located at the centre point of McCain Foods’ plant network

FOOD & DRINK BUSINESS EUROPE, JUNE 2011

in Continental Europe, the company has established a new cold storage facility to centralise logistics in the region, so reducing annual kilometres driven by an estimated 180,000 and emissions generated from fuel use by 140 tonnes.

Operational since last year, and with a capacity of over 70,000 pallets, the new facility at Harnes is the largest refrigerated automated warehouse in France. This single high density warehouse allows McCain Foods to merge the storage and distribution of eight regional warehouses in Bethume, Harnes and throughout northern Europe. In addition to savings on operational costs, such as electricity, the automated warehouse reduces transportation costs and supports McCain Foods’ strategy for sustainability. The logistics service provider Kloosterboer runs the warehouse exclusively for McCain Foods.

Leading By Example As a global market leader, McCain Foods is influencing the wider food industry’s standards and approach to sustainability through leading by example. McCain Foods’ ongoing investment in ‘green projects’ is not just about cost savings. The projects help to demonstrate the company’s CSR commitment and strengthen both its reputation and the McCain brand. J 39

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I MARKET FOCUS

Marine Ingredients – The Next Wave in Functional Food Innovation? n 2010 the functional food market was worth $24 billion and it is growing by approximately 14% per annum. In the last five years the number of new product Iintroductions carrying a specific functional health claim (such as heart, eye, bone and gut health), has more than doubled, according to Leatherhead Food Research.

Food and drink companies are increasingly driven by the need to develop products with optimal nutritional properties for human health, but to gain a foothold in the market manufacturers are increasingly looking for distinctive ingredients to differentiate their products.

The growth of the functional foods market and the need for product differentiation is pushing the boundaries of ingredient exploration further afield. Increasingly companies are utilising the marine environment to discover new ingredients. For example, utilising the major bioactive properties of marine peptides include their effect on anti-hypertension, as an antioxidant, satiety enhancing effects and antistress effects in beauty foods. Marine ingredients also have the potential to open up opportunities to drive category innovation. For example, the application of essential omega-3 fatty acids in food and drink products (rather than in pill and supplement format) to promote brain, eye and heart health.

As the hard edges of the pharmaceutical and food industries converge, marine derived ingredients could increasingly provide food and drink companies with a unique source of product differentiation, points out Leatherhead Food Research. J

Marine ingredients also have the potential to open up opportunities to drive category innovation.

In 2010 the functional food market was worth $24 billion and it is growing by approximately 14% per annum.

I RETAILING

Record UK Grocery Market Share For Discounters he latest UK grocery share figures from T Kantar Worldpanel, for the 12 weeks ending 17 April 2011, show stellar performances for Aldi and Lidl, the Germanowned discounters. Aldi and Lidl lead market growth for this period, with year-onyear sales increases of 15% and 14.7% respectively. Both retailers also achieved alltime record market shares of 3.3% for Aldi and 2.6% for Lidl.

“While the discounters are performing well this trend is not a re-run of 2008 when

new shoppers turned to these outlets in response to the recession and 9% food price inflation,” points out Edward Garner, communications director at Kantar Worldpanel. “Currently, discounter growth is fuelled by existing shoppers sharply increasing their spending levels.

While in comparison to other major outlets Aldi and Lidl’s basket sizes remain relatively small, there is no doubt that these two retailers are now taking a larger portion of shoppers’ spending.”

After the discounters, the next highest grocery growth was posted by Waitrose at 7.7% providing further evidence that not everyone is responding to economic pressures in the same way.

Major share growth remains elusive for the top four retailers FOOD & DRINK BUSINESS EUROPE, JUNE 2011

this period with only Morrisons out-performing the market to lift share from 11.8% 12 months ago to 11.9%.

Edward Garner continues: “Last period, the grocery growth rate plunged from 3.9% to 2.6%, suggesting that shoppers’ purses had snapped shut. This period, growth has recovered somewhat to 3.6%. Part of the reason for this is the late timing of Easter in 2011. Seasonal products such as flowers, hot-cross buns, lamb and, of course, Easter eggs all showed sharp decreases over the same period last year as Easter was much earlier. However, this year there may well be a degree of catch-up taking place as Easter markets peak later.” J 41

I CASE STUDY

Sanderson is Proven Performer at GR Wright iller and bread mix producer GR M Wright & Sons is increasing efficiency and raising performance with the help of Formul8, the food industry’s leading business management solution from Sanderson.

Since its establishment in 1867, GR Wright & Sons has held a deserved reputation for the superior baking characteristics of its Wright’s flour. Flour milling remains

at the heart of this business, but a progressive approach to manufacturing means the family-owned organisation now offers a wide choice of flours, as well as speciality bread and cake mixes.

The organisation has gone from strength to strength during the past decade, growing from an £8 million to £28 million turnover business in that time. Employing 80 staff, the firm still operates from its original location at Ponders End Mills, Enfield in north London. The customer base is broad, ranging from all the major supermarkets and large businesses, such as Warburtons, to independent high street bakers. As the number of high street bakeries has reduced over the years, Wright’s has diversified its product range. In addition to supplying flour to Warburtons, and regular bread mixes to high street and supermarket instore bakeries, it has also developed speciality mixes for bakers - including products for the ethnic markets - plus a range of bread and cake mixes for consumers, on sale in the major supermarkets. To maintain its market position, Wright’s is committed to ensuring that quality and service levels surpass expectations. Flexibility is a key part of 42

this proposition. “We can make any bread or cake mix a bakery might require; that includes developing the recipes,” says Wright’s finance director, Lesley Morris.

Food Business Solution Wright’s has been using Formul8, the specialist food sector business solution from Sanderson, for almost ten years.

The company first implemented modules to help it with the commercial side of the business, such as sales order processing, financials and EDI. More recently, it has added to the system, with modules for improved management of customer accounts and extended functionality within the mill itself. “Part of the original attraction for us was the modular nature of the Sanderson system. We have a small team and it has worked well for us to implement elements as we need them,” says Lesley.

A year ago, Wright’s decided the time was right to implement the recipe control module. “The idea was that we could store recipes for speciality mixes on the system, which would include cost and batch mixing information,” says Lesley.

Recipe Control Implementation of recipe control was phased, and it too has been highly successful, enabling Wright’s to gain better visibility, increased confidence in the data available, and improved accuracy and efficiency throughout the organFOOD & DRINK BUSINESS EUROPE, JUNE 2011

isation. “The project has gone very smoothly indeed,” confirms Lesley.

Recipe control functionality began with purchase orders being input directly to Formul8 by each head of department.

Now, when goods arrive, they are matched immediately to the order on the system.

Once deliveries are checked and verified, lot numbers from suppliers are entered on to the system: “This starts the traceability process, which is crucial,” says Lesley. As well as lot numbers, best-before dates and pallet numbers are recorded and a label is produced for each incoming pallet. “This gives us a live, accurate picture on the system, which helps me when I have to value stock at the end of each month,” she adds.

“That used to be a labour intensive process; now it’s simple and always accurate.” Wright’s currently uses approximately 130 ingredients, ranging from salt to sundried tomatoes, and the number is increasing all the time. “It gives us vital information about what ingredients we have and how old they are, and it means we never run out of stock.”

The system generates a report for the production manager each night, detailing stock levels and orders for a particular date range – next day, three days or a week, for example. From this, he generates the pro-

duction schedule. Each order is shown on the system for the batch mix team, listing the ingredients. “The appropriate pallet label is scanned to collect the ingredients for that order, so we are recording exactly which ingredients are used, as well as lot numbers and best-before dates. The system prompts the individual to select the oldest pallet of that ingredient, so we can achieve perfect stock rotation.”

Traffic Light System Within the integrated recipe weighing system, there is a traffic light system to indicate weight tolerances for specific recipes.

As each ingredient is weighed, the light changes from red, to amber, then green to show the tight tolerance has been met. “It’s all about precision and giving us the exact weight used for each product,” says Lesley.

Precision is also required in mixing, and instructions are generated to ensure ingredients are added in the correct order and blended for the required time. “We weren’t sure how the batch mixing staff would react to the new technology, but they have really taken to it,” she says. “It is very simple to use, it’s working very well and it means it’s now very difficult to make a mistake.”

Lesley says the addition of recipe control has improved accuracy and efficiency, particularly in terms of stock rotation. But the most important aspect has been traceability, which is crucial within the food sector.

“We deal with all the major supermarkets and several large food manufacturers. All of them send auditors to their suppliers to verify that products can be traced from supplier through to finished goods.”

Before the latest upgrades to Formul8, GR Wright used paper documentation to meet the auditors’ demands. “Now, we have the information there on screen. We have had auditors on site since we went live with this, and it has made a huge difference – it was very quick and easy.”

Eliminating Risk Fortunately, Wright’s has never had to recall a product, but Lesley agrees that the Sanderson system is helping to eliminate risk, as well as the cost implications of that risk, since any batch could be pinpointed accurately without the need for widespread recalls.

The experience Sanderson has in the food sector has been vital to the success of both the latest project and the ongoing relationship. “We are confident in

Sanderson’s ability. There isn’t much they haven’t seen before because they are so experienced in the food manufacturing sector and that’s vital for us.”

As part of the same project, paper bag stock information is now held on the system in real time. “Now, as the product is manufactured and put into a bag, that bag stock is updated automatically,” says Lesley. “This gives me the bag stock value for our monthly financial report, plus it ensures we never run out of a particular bag type, which did happen on occasion in the past.”

Useful Addition At the same time the recipe module project began, Sanderson suggested that the email module might also be a useful addition. Lesley believes it has turned out to be far more than that. “The email module has been fantastic for us,” she says.

Initially the company took the email module because it could see an immediate benefit with purchase order entry: “We wanted each head of department to input purchase orders directly to the system, rather than writing out the order, phoning it through to the supplier and passing information to the office to load to Formul8. With the email module, the order could be sent automatically from Formul8 to the supplier, with a copy email to the head of department.” That process is now in place and, says Lesley, is proving to be a major benefit. “It has cut out all the double handling of orders, saving us considerable time and significantly improving efficiency.”

Wright’s is also now using the email functionality for issue of invoices and statements.

“This was another suggestion from Sanderson and it was another great FOOD & DRINK BUSINESS EUROPE, JUNE 2011

idea. Our largest customers wanted to remain on EDI, and some smaller high street bakers preferred post, but there are a huge number in between and many customers have been happy to move to automatic email invoicing. Within six months it saved us a vast amount of paper, postage and time.”

Another aspect of the email module, email alerts, now form an important part of the system functionality, too. They are being used to warn the quality control team, for example, if ingredients arrive without the required certification, and to alert sales representatives if a customer order will breach the prescribed credit limit.

“The addition of email functionality has been an unqualified success - and to an unexpected extent, as we find more uses for it week by week,” she says.

Exploiting the System Lesley Morris and her team are looking at other ways to exploit the system’s capability to benefit business activities even further; Business Intelligence is one such example. “We installed the business intelligence module two years ago and it has given us valuable sales analysis data, statistics, trends and more. It’s extremely powerful and flexible, and we know that there is much more we can do with this. It’s definitely one for the future.”

A final product packing phase will complete the recipe control implementation very shortly and other modules being considered by the company include quality control and customer complaints.

For GR Wright, service is a key differentiator: “Better operational visibility and improved data accuracy is enabling us to react more quickly and effectively to customer demand,” says Morris. “Formul8 will undoubtedly support our business for many years to come.” J

43

Spooner Industries Significantly Reduces Lead Times For Customers

Spooner Radbend program.

perating with 125 employees from 60,000 square foot premises, Spooner O manufactures products ranging from industrial ovens and sausage skin machines for the UK and overseas food markets, through driers for the tobacco industry and air turns for paper companies, to coil coating and other industrial processes for the metals sector. Spooner industries has invested heavily in advanced manufacturing software which has become essential for the company to meet customers’ increasingly shorter lead times.

Nick Murgatroyd, who is responsible for lasering and folding the parts, says the world’s most powerful sheet metal CAD/CAM software, Radan, has played a major role in meeting those deadlines, by programming and driving the company’s Trumpf laser and Edwards Pearson press brake.

Spooner Industries set up a fully integrated operation incorporating Radan, Autodesk Inventor, the laser, the press brake and Microsoft AX business system. A bespoke Radan function speeds up the process of creating nests simultaneously from a number of works orders, contributing greatly to their ability to manufacture one-off products very competitively. “The lead time depends on the size of the job, but we can have a drawing issued in the morning and potentially start cutting in the afternoon. Previously, we couldn’t even dream of starting the manufacturing within a couple of days,” says Nick Murgatroyd.

With both the bespoke Radan function and Autodesk Inventor linking into the fully integrated Microsoft AX business system, Radan is capable of processing flat packs from as many individual works orders as are required at any one time.

Inventor holds a bill of material for everything, and from there they get their list of

parts, materials and quantities.

Nick Murgatroyd says: “Radan reads the list and creates all the symbols and then the nests, so all we have to do is to tell Radan what sheets we’ve got, and run the nester.

Previously it was a manual procedure. All the flat packs were created for me, but I had to open each one and create all the programs. Now, the bespoke function does it all together by putting all my flat packs into a nest schedule for me. All I have to do is to hit the ‘Run Nester’ button. It’s unbelievable how much time it saves.”

With the drawing office using Inventor as their main CAD system, a number of standard models has been set up as the starting point for most new designs. “This library of parts is invaluable, because while

Nick Murgatroyd working on a laser nest.

utilisation. If I’ve got 200 or 300 works orders which are all the same I’ll simply run the automatic nester for a few moments.” And as part of a push to reduce the number of remnants he has recently started to create nests for parts that are to be used for different jobs, and even for different customers.

But when he is working on what he describes as ‘oversized’ parts, he will finalise the nest himself. Radan has a powerful capability for the user to construct the nest interactively in this way with the help of the nesting program. While Radan provides an excellent nest automatically, Nick Murgatroyd is able to optimise it even further, taking his particular production requirements for that job, into consideration.

When works orders for the lasered parts are returned to the AX business system, it shows which items need to be sent on to the press brake. “Before we added Radbend to our suite of Radan modules in 2010, we just opened the 2D drawing, worked out from that what we needed to fold, and programmed it manually on the machine.

Now, programmer/operator Andy Carlton finds the part number in Autodesk Inventor’s data management tool Vault, and creates the program for the Edwards Pearson offline.

“We’re definitely able to fold a lot more now, and Radbend gives us the ability to bend complex and more complicated parts.

It frees up valuable machine time and improves first-off reliability, reducing manufacturing costs and saving us fabrication time. Also, costly mistakes are eliminated, thanks to the automatic collision detection, both with the tooling and the machine tool itself.” J

our end products are generally bespoke for the particular customer, they do consist of similar parts.” The drawing office can design parts which are test-proofed on the software before being approved for manufacture. Once the team are happy with the finished model it is exported into AX, which creates the works orders – then the parts are cut on the Trumpf laser, before moving on to the Edwards Pearson press brake for shaping.

Whether Nick Murgatroyd uses fully automatic nesting or finalises the nest himself with Radan’s powerful manual nesting function, depends on how many parts they’re producing in the run. “Irregular shape nesting is absolutely amazing, regarding how well it can get irregular shaped parts into the sheet with effective material Spooner Trumpf laser in action.

FOOD & DRINK BUSINESS EUROPE, JUNE 2011

45

Delivering the Message – On Time t was just over three years ago that Stobart Ipermanent Group formed Stobart Ireland, creating a presence here. It was a concept

the needs of the supplier,” explains Sean Brogan.

that they had considered for some time, to satisfy the Irish needs of their UK customers.

Three years later, with 300 employees servicing all parts of the country, the sight of Eddie Stobart trucks on Irish roads is becoming increasingly common. Later this year, the company will officially open its new cross docking, warehousing and office headquarters at Dublin Port to compliment its bases at distribution centres in Cork, Belfast and other regions. The much publicized involvement in Aer Arann - the regional airline – added to Stobart Group’s aviation interests and demonstrates the commitment Stobart has made to the Irish jobs market.

Managing Director of Stobart Ireland, Sean Brogan, understands the manufacturing business more than most. Having continued involvement in the family bakery business in County Galway – which exports some 50 loads per week from the West of Ireland to the UK - Brogan is all too familiar with the route to market.

Distribution Stobart runs a fleet of 2,200 trucks in the UK, Ireland and Western Europe. The fleet combines a mixture of ambient, chilled and specialized equipment. All vehicle movements are monitored, tracked and planned from ten main planning centers throughout the UK and Ireland.

Along with this, the Group focuses on load fill factors, treating all customers as one, as opposed to providing dedicated fleet which inevitably results in waste.

“The reality in the distribution trade is that, if everyone had the same mindset, the reduction of trucks on the road would be phenomenal. Empty trucks for us are a cardinal sin. Clients can’t be expected to pay for such inefficiency and with us, they won’t,” Sean Brogan remarks.

In addition, with over six million sq ft of cutting-edge warehousing facilities, Stobart offers real efficiencies in distribution solutions for UK, Irish and European based customers.

Efficiency The biggest logistics challenge for Irish based manufacturers is food miles and route to market. Manufacturers need solutions that deliver full loads, part loads and groupage, in the most efficient and cost effective way. This can only be delivered by effective transport solutions that maximize vehicle utilization and reduce waste.

“Food miles and route to market are important, as you don’t want to be in a situation where you’re inefficiently running trucks empty around a country,” says Sean Brogan.

The focus on food miles is relentless. Stobart is constantly trying to develop its networks, avoiding waste, reducing energy usage, while delivering effective services.

Approximately, 4,500 deliveries are made every day by Stobart trucks – with over 99% having timed bookings and windows of no more than 30 minutes to an hour.

To achieve this, Stobart has invested heavily in its IT systems, people and equipment.

“We are focused on the demand of the retailer and 46

Brand Building It is this focus on being ahead that has seen Stobart Group develop into the FTSE 250 Company it is today. Stobart Group Plc is one of the largest multimodal logistics companies in Europe, employing in excess of 5,000 people. The Group’s divisional structure comprises, Stobart Transport and Distribution, Stobart Estates, Stobart Infrastructure and Civils, Stobart Air and Stobart Biomass. It represents quite a journey for the company that can be traced to Eddie Stobart himself, an agricultural contractor who started the

FOOD & DRINK BUSINESS EUROPE, JUNE 2011

Sean Brogan, managing director of Stobart Ireland.

business in the North of England in the 1960s.

The company is conscious of its brand values and respectful of its roots. “Stobart has put a lot of work into building its brand. This is done not just through its iconic trucks, but through the drivers, planning staff, backroom staff and warehouse staff. If you’re in a Stobart warehouse you’ll know it is a Stobart warehouse, just like you know what a Stobart truck looks like. The reasons we do this is because we believe it’s about delivering a service consistently, reliably and cost effectively,” Sean Brogan points out.

So what makes Stobart different from its competitors? “We deliver a service to our customers which is supported by the most advanced IT systems and equipment available today. We focus on our staff, our training and our communications. We are constantly listening to the feedback from our customers, our drivers and our office staff and are reinvesting in order to keep us ahead.

“As long as we continue to work hard and stay focused on what matters to customers, the potential for further growth can be achieved,” says Brogan. J

I GREEN ENERGY

Producing Biofuel From Waste Crisps and Pies reenergy, a privately owned company G that supplies one fifth of Britain’s road fuel, has begun producing biodiesel from food waste. In a unique partnership with Brocklesby, a specialist in recycling edible oils, unsaleable food products such as crisps and pies, which would previously have gone to landfill or compost, are now being converted for biofuel and energy production. This new initiative helps to reduce the environmental impact of the fuel that Greenergy produces while also creating a new alternative source of fuel.

Greenergy has invested £50 million in its biodiesel production facility in Immingham on the east coast of England in order to efficiently process used cooking oils, which are more complicated to process than ‘new’ oils such as rapeseed. The company already uses significant quantities (more than 20 million litres a month) of biodiesel from used cooking oil supplied from a range of

food producers.

In order to extend its use of wastebased biofuel even further, Greenergy is now beginning to make biodiesel from high fat solid foods such as pies, sausage rolls, pastry and crisps which are not fit for sale because they are mis-shapen, overcooked or past their sell by date. These food products, which typically contain between 25% and 30% oil and fat, are sourced from a variety of food manufacturers nationally. Other suitable foods include taramasalata and oil from fish frying containing high quantities of breadcrumbs.

The oils and fats in these foods are extracted through a novel process developed by Brocklesby and are then further purified by Greenergy. Only then are the oils and fats clean enough to be suitable for conversion into biodiesel. The finished biodiesel is then blended in small quantities

into the diesel that Greenergy supplies to petrol stations nationally.

Any food solids that remain after processing are currently dried and then either composted or used to produce energy through anaerobic digestion, but in future could be used to make solid biomass fuel pellets or briquettes, or more fuel for cars in the form of bioethanol. Waste water is used as a biomass crop fertiliser. J

I WASTE MANAGEMENT

Effluent Specialists Lighten the Load For Premier Foods During Peak Production iltbuster Process Solutions (SPS), leading specialist in effluent and water treatS ment, has installed a Dissolved Air Flotation unit (DAF) at Premier Foods’ Ambrosia Creamery in Lifton, Devon. The DAF unit has helped to significantly reduce loading on the effluent plant.

The volume and strength of effluent being discharged can often prove challenging for food production sites in terms of both pressure on the onsite treatment capacity and complying with discharge consents to river or sewer. At Premier Foods’ Lifton site, the months in the run up to Christmas each year traditionally led to the effluent treatment plant being significantly overloaded, resulting in much higher operating costs and difficulty in maintaining a stable treatment operation.

During 2010, the site decided to seek ways of alleviating this and engaged SPS to assist. After initial assessment, a D100 packaged lamella DAF (Dissolved Air Flotation) plant was recommended and installed, to remove solids, fats, oils and grease and the associated chemical oxygen demand (COD).

This successfully reduced the COD loading

on the biological treatment stage by about 30% and continues to ensure a stable operation with vastly reduced operating costs.

Clwyd Jones, business unit manager for SPS, comments: “This application at Lifton serves as an excellent example of our ability to deliver effective solutions in a timely manner. A treatment plant which is overloaded and unstable can present real problems; costs and demands on operations staff can quickly spiral out of control, not to mention the potential effects on production.

This site already had an existing balance tank and good treatment facilities, but the process needed respite by reducing the load at the front end of the works. This is where SPS stepped in.”

FOOD & DRINK BUSINESS EUROPE, JUNE 2011

The D100 DAF unit supplied by SPS is the company’s largest mobile hire unit. It uses established solids and liquid separation technology to generate ‘whitewater’, where microfine air bubbles combine with solids, fats and other particulates and rise to the surface of the DAF unit. The solids thicken on the surface and are automatically removed by a motorised scraper. The treated water flows onto the biological treatment stage of the treatment plant while the solids are taken away for recycling.

Ian Thomas, infrastructure and utilities engineering manager at Premier Foods, says: “SPS’s DAF unit provided a cost-effective solution to our biological loading capacity problems. The unit continues to perform very well, with little intervention, reducing demand on resources. As well as the operational improvements, it also significantly reduced our treatment costs while enabling us to comply with our discharge consent.

From the initial advice on identifying the best solution, through to the completion of the hire period, SPS’s expertise has been invaluable.” For further information on SPS visit www.siltbuster.com. J 47

Think Orange, Naturally – New Natural Beta-Carotene 1% CWS Colour ycoRed has announced its latest formuL lation for natural beta-carotene colour, Lyc-O-Beta 1% CWS. Lyc-O-Beta is an innovative, natural beta-carotene colour in powder form, designed to instantly dissolve when mixed with cold water. It is suitable for use in a variety of applications such as beverages, dairy, bakery and confectionery.

Lyc-O-Beta’s formulation not only provides a natural and vibrant colour, it also ensures the daily dietary requirement for vitamin A and compensates for vitamin A deficiencies in cases of inadequate fruit and vegetable consumption. Natural betacarotene is also known as a potent antioxidant and can protect against oxidative damage on a cellular level.

According to Innova Market Insights, changes in the European regulatory levels resulted in a decline in the use of the socalled ‘Southampton Six’ artificial colours, which have been forced to carry a warning label since July 20th, 2010. Analysis of the top colours being used in confectionery found significant declines for certain artificial colours, including quinoline yellow and sunset yellow.

“Food and beverage manufacturers are facing significant high-stability problems when using natural colourants,” explains Udi Alroy, vice president global marketing

& sales at LycoRed. “A key aspect of this new colourant is the high stability of Lyc-O-Beta 1% CWS, both within the powder itself and when released into the food matrix.

This has been achieved by optimizing the formulation and the antioxidant system used to protect the colour.”

Lyc-O-Beta 1% CWS is highly stable to heat, light and oxygen as well as across a wide range of pH. This new colourant allows variations in shade from vibrant yellow to orange and delivers a natural and healthy colour to existing and new formulations. It is suitable for a wide range of applications, including: carbonated beverages, decorative icing, ice cream, ready to drink beverages, fruit preparations, jelly beans, panned confectionary and more.

“Over the years our natural colourants have gained wide recognition within industry for their high quality and excellent performance,” notes Udi Alroy.

“LycoRed follows the stringent regulations of the European Commission in order to provide a healthy and natural solution for its customers. We have conducted an extensive range of application trials using our new Lyc-O-Beta 1% CWS. Plus, our

in-house application expertise supports our customers in order to ensure a short time to market.” By offering a competitive natural solution based on a 1:1 comparability to the leading market shade, LycoRed is answering a growing consumer trend toward natural solutions and is poised to replace the synthetic product still used in the market today.

LycoRed is a science-based company with regional facilities in the US, Europe and Israel. It supplies natural carotenoids and a wide range of other nutritional and colouring ingredients to the dietary supplement, functional food and beverage and nutricosmetic industries worldwide. For more information visit www.lycored.com or www.lycopene.com. J

Tate & Lyle Launches First Fruit-based Calorie-free Sweetening Solution ate & Lyle has entered into a five-year T strategic partnership agreement with New Zealand-based BioVittoria for the exclusive global marketing and distribution rights for BioVittoria’s monk fruit. The only fruit-based calorie-free sweetening ingredient available today, natural monk fruit extract is a means to reduce sugar and calories in foods and beverages.

The agreement expands Tate & Lyle’s broad portfolio of wellness ingredients and advances the company’s strategy of extending its leadership position as a global provider of specialty food ingredient solutions. Tate & Lyle will be marketing the products in the US under the Purefruit brand name.

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According to terms of the agreement, BioVittoria will award exclusive global sales and distribution rights to Tate & Lyle for its monk fruit extract. Tate & Lyle will support the development of the line of Purefruit products with sales, research, marketing and product development. Using proprietary, natural methods, the Tate & Lyle research team has further refined and improved the taste of its Purefruit products for a wide FOOD & DRINK BUSINESS EUROPE, JUNE 2011

array of foods including beverages, dairy, cereal, confectionary and bakery products.

BioVittoria will continue management of the monk fruit extract supply chain, including seedling cultivation, the grower network and natural processing.

Monk fruit is also known as luo han guo and is native to South East Asia where it has been in use for hundreds of years. Its pulp is steeped in hot water to release a natural, calorie-free sweetening ingredient that is around 200 times sweeter than sugar. Monk fruit extract received a letter in January 2010 stating that FDA had no questions after receipt of BioVittoria's GRAS (Generally Recognized As Safe) notification. J

On the instruction of

Watton Produce, Norwich, UK.

Complete contents of modern food processing and packaging facility Wednesday 20th July 2011 18 complete lines of various capacities for both retail and bulk packs. A large proportion of this equipment was installed in 2010. The remainder of the equipment has been fully serviced and is still currently in operation.

This 18 acre site comprises - Sormac root vegetable processing line. Approx 3 months old, all stainless steel, from box tipper, to de-stoning, washing, peeling, grading and discharge * 16 pan multihead weigh head with staging feeding onto form fill and seal machine. Newtech weigh heads with baggers * Concept engineering colour sorters * Complete Peal topping and tailing line with loaders * Numerous infeed and outfeed conveyors * Numerous inspection tables * Numerous shunter lorries and trailers * Air compressors * FAM slicers and dicers * Complete baby carrot peeling line feeding onto flume wash and also a line feeding onto hydro cooling system * 40 foot weigh bridge * Multivac T500 tray sealing machine * PA tray sealing machines, rotary and inline * Continuous bag sealers * Scales * Vemags * S/s Tables * Ulma, Ilapak and Record flowrappers * Complete 2010 effluent plant and filtration unit * Metal detectors of various apertures * Checkweighers * Xray machines * Sormac knife peelers * Numerous tote bins * Thousands of plastic trays * Contents of fully equipped test kitchen * Contents of canteen * Contents of engineers workshop * Single and double chamber vacuum packers * Dolavs * Inkjet printers * Box tapers * Labellers * Tray washers * Turbo depositors * Numerous conveyors of various lengths and widths * Sanitisers * Carrot batoning line * Automatic label printers * Sliver removers * Mash potato line * Vibratory conveyors * Flume washers * Approximately 1000 Lots.

Video available.

This equipment is suitable for many aspects of the food industry.

For a full colour flyer, catalogue and further details contact the Auctioneers: 0044 (0) 1225 874677 – www.clarke-fussells.co.uk