Investing in the future
Published:  10 August, 2007

Having spent the past few months acclimatising to its new production headquarters in Inverurie, west of Aberdeen, JG Ross Bakers is embarking on the acquisition trail as it aims to turn anticipated sales of £8.3m for 2008 into an annual turnover of £11m by 2011. "We now have the capacity to target more volume," executive chairman and company founder George Ross tells British Baker.

The family company has already acquired two retail outlets in Aberdeen and several other firms have contacted JG Ross recently to see if it would be interested in taking them over, reveals George. These approaches are under consideration. At the same time, the company is constantly on the lookout for potential new retail outlets.

George and his wife, Betty, started up JG Ross in 1962 with a single shop. The empire he now runs with his two sons - production director Cameron and commercial director Graeme - extends to 23 shops, two coffee shops, two bakeries and a thriving wholesale division. But following the move to the new production facility in Inverurie, the company has greatly increased its production capacity. "We now have the ability to double our production. There is a phenomenal amount of growth available," says Cameron.

"We have gone through a period of consolida­tion here. We are bedded in and now we are ready to hit the accelerator," he adds. "Our intention is to look at where we can acquire shops and grow our business, either organically or through acquisition. We are definitely looking to go outside our current area."

At present, the company's delivery area extends from Inverness in the north to Ballater, Royal Deeside in the west and across to Stonehaven, Kincardineshire in the south. Its retail presence, meanwhile, stretches from Elgin down to Stonehaven. Its other bakery operation, located in Portsoy, Banff on the Moray Firth, came under the company umbrella in the late 1990s when JG Ross acquired Forrest the Baker, a craft baking business which continues to operate as a separate entity.

expanding business

JG Ross is planning to achieve its £11m annual turnover target not only through acquisition but also through organic growth. For example, the company already counts several retail chains among its regular customers - including most notably Tesco and the Scottish Co-Op Group - and is engaged in discussions with the aim of significantly expanding its business with these and other multiples. JG Ross has also been approached to produce retailer-specific products under the retailer's own label. "The new facility offers the company the opportunity to explore this and other avenues available for growth," it says.

The company also acknowledges the role new product development must play if it is to realise its ambitions. Morning goods account for some 40% of company turnover and sandwiches a further 15%; savouries/ready-meal products provide a further 15% of company sales; cakes and fancies 12%; biscuits and hot plate goods 12%; and bread/rolls the remaining 6%. "We are looking at growth over all of these areas," says Cameron.

Indeed, the company has not allowed the inevitable distractions of a major bakery move to stand in the way of product launches, with recent examples including low-GI muffins and bread. "The sales of these products are going extremely well and allow us to meet the consumer demand for healthier products," he says.

additional capacity

The new bakery stands on 3.7 acres of land. The building accounts for 37,000sq ft compared with 14,000sq ft at the previous Port Elphinstone site; the production area has expanded from around 10,000sq ft to nearer 25,000sq ft. JG Ross has closed its separate sandwich-making operation at a leased site in Dyce on the outskirts of Aberdeen and has moved this function to a segregated, high-risk product manufacturing area within the new Inverurie bakery. The Port Elphinstone building is owned by the company and options are being considered for development of the site.

The availability of additional baking capacity at Portsoy certainly helped JG Ross in maintaining normal levels of production during the move, especially as a significant proportion of the baking equipment had to be transferred between the old and new Inverurie facilities. "Customers would have seen no difference at all," says George.

The new bakery project cost £4.2m, with the building itself accounting for around two-thirds of the total expenditure. A further £500,000 was invested in new kit, including additional ovens from Revent, a larger roll plant and a couple of provers from Acrivarn which, according to Cameron, have boosted capacity from 10 racks to 27 racks and improved the consistency of the final product. The facility has been designed to ensure the best manufacturing flow - from goods in to weighing out of ingredients, production, packing and distribution.

JG Ross' production hub has moved barely two miles but, in jumping across the A96 to Highclere Business Park, the company enjoys significantly improved access as well as excellent vehicle parking capacity - which George says was "one of the major problems at the old bakery".

popular coffee shop

With the new facility in a prominent location next to other commercial units and a burgeoning housing estate, the management team has looked to cash in on local trade by setting up a conve­nience store, a take-away outlet and a 120-seat coffee shop/restaurant within the bakery building. "The coffee shop is already very popular and we have done very little advertising," says George.

The move to Highclere has also boosted the local economy, creating a further 46 jobs. If the company realises its growth targets, workforce numbers are expected to increase from the current 388 to nearer 450 over the next three years. "We can now offer staff a better canteen and changing rooms - and generally better working conditions," says Cameron.

Indeed, the company's role in the community was recognised in early June when, as part of the 2007 Grampian Awards for Business Enterprise, it was named winner of the Alick Buchanan Smith Spirit of Enterprise Award. This recognises companies demonstrating commitment to the community in which they operate - through initiatives that promote community development, staff volunteering or growth of a business that contributes significantly to the local economy.

Another recent accolade recognised JG Ross' efforts to enhance its 'green' credentials at the new bakery: a system that captures rainwater from the roof and filters it for reuse in toilets and vehicle washing has earned a Green Butterfly award from the Aberdeenshire Environment Forum for the conservation of natural resources.

George acknowledges the help and advice from other members of the Scottish baking industry for making the bakery move as smooth as it ultimately proved. He stresses the importance of detailed planning before undertaking such a monumental project, with one of his favourite adages: "Fail to plan, plan to fail." Nevertheless, he adds, companies should accept that even the best-organised new builds can run behind schedule: the new bakery was due to begin production last summer, but it finally opened in March this year.

While he is understandably proud of this massive commitment to the company's future, George is keen to maintain the current balance within the business between retail (60%) and wholesale (40%). He also wants it to remain faithful to its roots: "We still want to be seen as a craft baker, not as a mass producer."

The company's stated aim is to be a major Scottish food producer without forsaking traditional craft baking methods and recipes. But these goals will not be pursued without a weather eye on the balance sheet - a point George emphasises with another favourite saying: "Turnover is vanity, profit is sanity." n




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