The Plimsoll analysis is highly regarded as an authoritative who’s who of the UK fresh produce industry and an opportunity for companies to size themselves up against the competition. Naturally, the results of the survey provoke a mixed response among the 500 companies listed, with some enjoying the profile, while others must witness the unwanted exposure of their misfortunes.
As reported in last week’s FPJ, a staggering 97 per cent of last year’s sales growth in the UK industry was amassed by just 98 firms, which means many others are struggling to survive in an atmosphere of declining sales and increasing debt. Plimsoll found 119 firms are in decline, despite efforts to control their costs, reduce their staff numbers or sell off some investment; 91 of the worst affected companies saw sales decline by an average of 10 per cent in one year and as a result, more than half of these lost money because extra costs could not be offset by sales; and 75 firms are working under such an escalating debt burden that they are staring failure in the face.
However, while the outlook for these businesses looks bleak, those on the up continue to shine, with “super companies” looking set to dominate the marketplace. And, many other companies have performed well or at least stepped up, in terms of sales, profits and productivity.
The report lists 33 companies as “best overall financial performers”, which, according to Plimsoll, are “getting the balance right between commercial and financial success”, managing to increase sales and maximise profits without compromising their financial strength. The company’s senior analyst, David Pattison, says these companies are demonstrating four times the sales growth figures and far greater profits than the rest of the industry. “The rest of the industry should be falling over themselves to do business with these companies,” he claims.
Among the 33 star companies, six are shining particularly brightly. BerryWorld Ltd, Bristol Fruit Sales, Fourayes Farm Ltd, HL Hall (International) Ltd, John Dennis (Barnsley) Ltd and JP Fruit Distributors Ltd have all been singled out as showing “a solid overall financial performance in the key areas of sales growth, profitability, debt management and trading stability”, and these are the ones to watch in the coming months and years, says Pattison.
According to the latest data recorded in the Plimsoll report - from December 2005 - soft-fruit marketing company BerryWorld registered total sales of £88.9 million, a growth of 34.3 per cent on the previous year. However, managing director Adam Olins says the company announced that sales exceeded £100m for 2006. So, what has driven such an impressive performance? Broadly speaking, the company is fortunate to be providing one of the most popular fresh products of the moment, but within that framework, it has ploughed a unique furrow in a number of respects, says Olins. “We are one of the few companies that has 52-week supply,” he explains. “Others do, but ours is relatively balanced, not heavily geared to a particular week in the summer or winter. Our biggest competitors have either predominantly UK fruit, and therefore more focused on the summer, or concentrate mainly on imports so they have an issue over the summer. For us that balance between the two is very important. We have been working towards that consistency for the last two to three years. It has enabled us to attract better staff.
Another feature of Olins’ strategy is working with fewer, larger suppliers. “Given the volumes of business, we take it from significantly fewer grower/suppliers than our competitors.” This focused approach extends to BerryWorld’s customer base as well, Olins adds. “Otherwise with category management, you end up being in competition with yourself.”
One of the company’s biggest investments of late has been in IT, both in the UK and abroad - an advancement reliant on several key elements, says Olins. “Our systems are very good and consistently updated. We are pushing it the whole time. For that to work you need the right systems, the right IT partners and the staff to put it into place - all aspects are equally important and you need a commitment at the highest level in order to make it work.” And the value of such an investment? “Our business has doubled in the last five years, but our accounts team is still the same number of people.”
The recent upsurge in berry sales has been staggering, but Olins believes there is more growth to be had. “The increase in sales has been dramatic in the last two to three years. I think it will slow down in the next few years but it will still be significant growth,” he says.
Wholesaler Bristol Fruit Sales (Market) Ltd (BFS) is one of the few companies to register a clear upward trend in overall performance, indicating a higher than average improvement in financial strength. At the time of the company’s latest Plimsoll entry - in September 2005 - it had achieved sales in the region of £45m, an increase of 8.5 per cent on the previous year. In addition, BFS reported a gross profit margin of 19.5 per cent, compared with an industry average of 14.7 per cent.
Fruit producing, processing and storage company Fourayes Farm also surpassed the industry average, with a sales growth of 33.3 per cent recorded for March 2005, which brought it to £7.2m, making it the 20th fastest growing company in terms of such growth. In addition, the company’s gross profit margin came in at 24.3 per cent, well above the industry average of 14.7 per cent.
According to Fourayes Farm’s managing director Philip Acock, the secret to the company’s success is keeping focused on the “business basics”, which include customer service and product innovation and diversification.
The biggest change in recent years for Fourayes has been the move from just growing fruit, to processing it as well. “We mainly produce apples, but now we slice them and dice them and manufacture them into fillings, with other fruits, such as cherries as well,” says Acock. “You can’t just give customers want they want, you actually have to tell them what they want. It requires a lot of perception, because you have to think about what people will want a few years down the line. Innovation is much more than just product orientated, you have got to get inside your customers’ minds and really know them: know their stores and their people.”
Such insight should extend to the rest of the market as well, Acock suggests. “You have to have an overall market view and know what’s happening in the food industry at large. And you need to know what your competitors are doing because supermarkets and food manufacturers are always looking to work with fewer suppliers so you need to be able to offer everything they are looking for. So, that means you need to work at making cost reductions and improvements in quality too.”
One way in which Fourayes has become more effective is by implementing a two-shift system for staff members across four lines. Not only has this increased overall productivity but it has also reduced the amount of overtime that needs to be paid for and enabled staff to work to fixed timetables.
The company has also gradually been broadening its product range and will continue to do so in the coming years. “We are not intending to do anything crazy,” says Acock. “We will be sticking with what we know, which is fruit, but we will continue to extend our offering and visit other processing plants around the world to get new ideas.”
Importer, exporter and commission agents for fresh produce, HL Hall (International) Ltd, achieved a staggering 60.9 per cent upsurge in total sales during the year ending February 2006, bringing it to £12.8m and ranked seventh in the industry. Since then, the growth has continued and, according to director Paul Devlin, the company is now seeing sales in the region of £14m. Devlin says the real key to HL Hall’s success is sticking to its core business values. “Primarily, we are growers ourselves so we remain extremely focused on both our suppliers and customers,” says Devlin. “We have had quite a lot of growth in the past couple of years and that wouldn’t have been possible without the professionalism demonstrated by our growers. An enormous amount of work goes into making sure we have products of the highest possible quality and that enables us, here in the marketing office, to be able to follow that top-quality service all the way through.”
With its marketing office based in Tonbridge, HL Hall has developed a strong reputation for its fresh and prepared products in the UK, but the company is keen to expand its horizons in the coming year. “For a long time we have been seen as a strong UK organisation but we are doing a lot of European marketing from this office,” Devlin explains. “We are going to recruit additional members of staff with language skills and will be looking for potential in any European countries where we feel we can add value.”
Fresh produce trader John Dennis (Barnsley) Ltd reported total sales in the region of £4.6m in March 2006 - an increase of 7.4 per cent. According to Plimsoll, the company was one of only 30 to show consistent improvements in pre-tax profits over the last four years and shareholders received £1.2m in dividends last year.
JP Fruit, formerly the sourcing, marketing and distribution subsidiary of the Jamaica Producers Group Ltd, has entered a period of flux following the buyout at the end of last year by Dole. According to the latest information recorded by Plimsoll, entered in December 2005, the company achieved total sales of some £141.9m, marking an increase of 16.5 per cent and earning it 17th place in the industry in terms of speed of sales growth. At this time, the average salary at JP was an attractive £31,000, considerably higher than the industry average of £23,000. Dole’s plans for JP Fruit have yet to be disclosed so 2007 could see some significant changes for the company that may well have a bearing on the charting of Plimsoll’s next industry evaluation.
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