The bagel boys grow up

19 January, 2007
Set up just eight years ago, Maple Leaf UK now dominates the bagel market in the UK. And a bold acquisitive policy has propelled it swiftly into the broader speciality breads market, as Anne Bruce reports
It's amazing that this all started with a business plan and a warehouse in near Rotherham," says Maple Leaf Bakery's managing director, Peter Maycock.
Eight years on, the speciality breads company has a £90m turnover and 1,000 employees. The roll call of its businesses includes New York Bagels, the French Croissant Company (FCC), which is the UK's largest croissant producer, speciality breads supplier Avance, the former Harvestime bakery in Walsall, a pretzel foodservice bakery in Southend and another speciality bakery in Cumbria. And most of these were bought up in a bold series of acquisitions in the last 12 months.Turnover has quadrupled since the end of 2005, Maycock reveals. It doubled in March 2006, when Maple Leaf bought the Harvestime bakery in Walsall. And it doubled again in December, when it bought up Harvestime's former sister companies, London-based FCC and Kent-based Avance, which supplies Pizza Express, among other customers.But what is behind this new force in the UK bakery market and what can we expect from it next? Well check out Maple Leaf's pedigree. The company was set up in 1997 as the European launchpad for Canadian food giant Maple Leaf Foods.Maycock says that Maple Leaf is only interested in buying major players - number one or two in the market - and it also wants to be involved with great brands. "We want to operate at lowest cost - not cheapest, but most efficient," he adds.As an illustration, he says the UK Maple Leaf business might one day have developed to include plant bread in the long term. But for now, there are no suitable targets for acquisition, he says: "That's very unlikely, with British Bakeries having just been sold and Allied Bakeries and Warburtons unlikely to come up for sale."Maycock, a former British Bakeries employee, joined Maple Leaf in the UK in 1997 and was charged with putting together the original plans for Maple Leaf's European bakery launch. He says he concluded rapidly that speciality bread and morning goods were the big areas of growth and opportunity in the UK.Lift-off came after extensive market analysis, when Maycock noticed that Tesco was importing its in-store bagels from North America. So in 1998, with the support of Tesco, he set up an own-label production site in Swinton, near Rotherham, helped by a government grant. Maycock comments: "We started with Tesco, were fortunate enough to add Marks & Spencer in 2000 and, in 2001, we bought the New York Bagel Company and its great New York Bagel brand. At this point, we began trading with all other retailers including Sainsbury's, Morrisons, Somerfield and the Co-op and decided to put our efforts into building the bagel category." In 2005, the company invested £12m on a new bakery line at the Swinton site, which is now the largest bagel bakery in the world, capable of producing 72,000 bagels an hour on its two production lines. Between July 2005 and July 2006, New York Plain Bagels were the second-biggest seller in the 'bakery occasions' category, with value up by 43.2% (Warburtons Bakery Preview 2006). Bagel turnover is now running at between £24-25 million a year and Maple Leaf claims it has around an 80% share of the UK bagel market. "The site is at around 60% capacity unless there is a promotion on," says Maycock. "That gives us space for two to four years' growth."Own-label accounts for about 45% of turnover and branded product for 30%. "We do all of the supermarkets because our 'boiled' bagel has proved to be the consumer-preferred bagel type in the UK, in common with North America. UK bagel sales are growing between 15-20% year-on-year." he says.The company recently ran a national TV advertising campaign and will spend £3m on more advertising next year, with another campaign under way this month and two more bursts later on. It has also seen very significant growth in its premium in-store bakery bagels, driven by fantastic growth at Sainsbury's, Maycock says.With its bagel ambitions on target, Maple Leaf began to look at other opportunities. It made its move in March 2006, buying the assets of Harvestime's Walsall site from administration.Maple Leaf was a late entrant into an administration process. It had considered



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