No weak Link

18 April, 2008
McCambridge's new chief executive Gavin Cox and chief operating officer Martin Davey speak exclusively to Andrew Williams about turning around troubled Inter Link Foods and establishing the McCambridge brand in the UK
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Back in 2005, McCambridge's chairman, Michael McCambridge, was quoted in the Irish Times as saying: "McCambridge is linked almost exclusively with brown bread and we want to keep it that way." Two years later, it acquired the second-biggest cake manufacturer in the UK, in the shape of Inter Link Foods. But they'd already picked up three UK businesses by that point, en route to the 10 in total that they've accrued in the UK and Ireland since 1999.
What's that all about? "That's Michael McCambridge speaking to an Irish paper!" exclaims chief operating officer Martin Davey. "McCam- bridge in Ireland is known for its brown bread." Fair enough. Lucky we're called British Baker.So what's changed? And, more crucially, what did the top brass see in the ailing cake giant Inter Link Foods, five times McCambridge's size, that got their juices flowing? The last nine months will have been a fascinating time for any flies on the wall. Inter Link's debts left a stream of seething creditors in its wake, while there were headaches with Inter Link's logistics, with that business itself having undergone a series of quick-fire acquisitions.McCambridge had already had successes turning around the likes of handmade tarts specialist Queen of Hearts, which it acquired in 2006. That bakery was losing a lot of money before it was taken over - a situation that has since been reversed, says Davey. Inter Link's massive scale and debt posed a bigger challenge, which it claims to be overcoming. But don't call McCambridge turnaround specialists..."I don't think we're that arrogant! We just want to do a good job," insists Davey. So the company is not some bakery equivalent to Ramsay's Kitchen Nightmares, stepping in to rescue struggling businesses? "Not everything we've bought has been out of administration. Until buying Inter Link, some of them were profitably trading businesses. The opportunities have not just been at the distressed end of the business."And the opportunities were large. The reverse take-over of Inter Link offered a portfolio that McCambridge didn't have: a route into some of the major retailers plus a huge amount of production capacity and capability. So what was McCambridge's primary ambition? "To make a profit," states new CEO Gavin Cox bluntly. "To take it from being a loss-making, apparently unwieldy business, into something more coherent and structured, as a sustainable business in its own right. What attracted me to McCambridge were the core strengths. It has some fantastic brands, fantastic businesses, and I saw it as a great opportunity."Inter Link's troubles appear to be in the past for Cox, who has had a rapid ascent to the top job since joining McCambridge in July 2007, being promoted from group finance director in February this year. The management team has largely been replaced, with the aim of addressing the question: what went wrong with Inter Link? "The directors of Inter Link went on day zero and we took over a pre-made management structure," says Davey. We've realigned that and made some changes and we work well together; I don't think we could have said that nine months ago. We have a common purpose.""We've tried to ingrain the McCambridge ethos," adds Cox. "One of the things we've done is change the culture, change the behaviour and the way things are done. The core businesses were sound businesses. There was nothing fundamentally broken with them. There were inroads into markets and into the customer. It's just a question of how you manage it and how you leverage that marketplace."Following a 'period of adjustment', creditors are on credit terms and, since January, the logistics have been overhauled. "We have a 250,000-case-a-week distribution operation, which is - if not perfect - well over 99%, and we're very pleased with it," says Davey proudly. "The savings we'd planned to make, we've made."Innovation planThe three-year plan, Cox reveals, will be to complete the first phase of integrating the Inter Link businesses. After that, the longer-term group strategy will focus on product innovation, and an analysis of where its products sit in the category. For example, the delivery of Soreen into the marketplace could be improved."We're in an ongoing process of reviewing where our core capabilities are and where our core strengths are," says Cox. "We've established that there are certain sectors that we're very strong in, such as the Soreen brand, that we're looking to develop. Soreen is a great brand and it's got a lot of potential. But the snack bars are not always displayed in the right place, so we're looking to help the retailers maximise their sales by putting that right."He hopes to better utilise the specialist knowledge of the bespoke businesses in the south, as well as Ireland, for more creative NPD across the large capacity cake lines. "We have strengths in our more niche southern sites," he says. "We're trying to focus that creativity around those niche premium products, and bring them more into the mainstream capacity product lines of the old Inter Link." Cox believes that its mix of premium niche bakeries and production scale give it a competitive edge going into retail. Part of that will involve bringing Fairtrade products into the mainstream, though he was staying tight-lipped on the details. "We're working on some products that are confidential, which no other retailer is working on, and which will give us a leading edge in the marketplace."While Inter Link was geared to own-label supply, we are likely to see more McCambridge branding on products, he added. Part of the long-term strategic plan is to develop the brands, especially the McCambridge one. "We're in the infancy of that development. We're considering some new products, and trying to work out where those products sit - whether that's in own-label or a brand."So what is Cox personally hoping to bring to the company? "My experiences are of working in much larger organisations, such as Uniq and Rentokil. There are some skills and disciplines I can bring from having worked outside the food business [though his last job was with St Ivel]. I've also been involved in turnarounds, looking at the key priorities and the longer-term strategy for the business."Picking up Inter Link out of administration has taken a significant amount of our time and resources, and that will carry on over the coming weeks. So there has been quite a lot of focus on the short-term priorities that the business has. As we come out of that, we'll be able to focus much more on the longer-term plans we have.""Not just brown bread": the rise and rise of McCambridgeMcCambridge is the largest manufacturer of wholewheat soda bread in Ireland. But the last seven years have seen it branch out into other areas, following an ambitious acquisitions growth strategy, which has seen its turnover leap nearly five-fold in the last year alone.McCambridge was established in 1985 but has a history of food production and retailing dating back to 1945. It employs some 2,500 staff across 20 bakeries. Turnover for 2008 is estimated at £175 million, making it the second-largest cake manufacturer in the UK and it plans to build on the 110 million mice pies it supplied into retail last year.While the family business has roots stretching back to the mid-20th century, the McCambridge Group was formed in 1999, with a view to entering the UK market, and has since made 10 strategic acquisitions.The first of those came in 2001 with WR&SV Hussey, followed in 2002 with Aldreds the Bakers. Between 2005 and 2007, businesses came thick and fast, with Plymouth Premier Pasties and Plymouth Premier Bakeries, West of England Bakeries, Queen of Hearts and Tredinnick Fine Foods all joining, culminating in the big one in July last year, the purchase of ailing Inter Link Foods.The company also acquired three Irish bakeries - Duggans, Gill's and Cookes - as well as a large-scale cake bakery in Poland, which came with Inter Link. The Polish bakery is spearheading a drive into Russia and the Ukraine and developing links into Germany, Holland and Spain.



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