Following its purchase of David Powell Bakeries last year, Rich UK has been busy integrating the business. George Thomopoulous explains the firm’s strategy and ambitions to Anne Bruce
It is nearly a year since Rich UK bought craft bakery David Powell Bakeries [in June 2005]. How is the integration going?
Two great brands have come together and have formed a very exciting business. We have simplified and integrated all systems and processes and we are revitalising the product portfolio; there’s a bit of duplication but not much, as Rich and David Powell sell different types of products. Rich does a lot of in-store products and David Powell a lot of breads.
We have probably got rid of 10% of the portfolio. The integration is still ongoing and we are looking at ways to give products more life – to exploit their potential in a new way.
Could you give an example of lines which have been rationalised?
We have looked at the total range and have rationalised lines that were not viable. For example, Eccles cakes have been part of the portfolio but, historically, the market has been flat. We were making them in small amounts and they were not viable. You have to be ruthless but fair to customers. Wherever we can, we help them to obtain suitable new suppliers.
What plans are there for future invesment and innovation?
We have spent £0.5m in Kidderminster and we are identifying where we need the plant here in Fareham. If we are going to be going for sheeters and freezing equipment, we need to make sure we do it in the correct manner. I am waiting for a proposal, that will start showing a return on investment in three years. We are likely to be spending between £1m and £2m, including maintenance.
David Powell is innovation director. There is an understanding that he will be with us for the next three to five years. He can really start to look at niche products, which complement what we are already doing in areas such as batters, fermented doughs, muffins and cookies.
Could you outline your longer-term strategy for the new enlarged business?
Turnover is steady and strong; despite shedding stock-keeping units (SKUs), we are stable on where we were last year on both the Rich and David Powell sides of the business.
At the end of the first quarter, we will be sitting down as a management team to do long-range planning for Rich UK. Our strategic intent in the UK is profitable growth in the business, by leveraging the combined expertise of Rich Products and David Powell Bakeries. This will be achieved through a focus on bakery and foodservice. We will be looking at indulgent, frozen and desserts and similar areas. We will use the David Powell brand in the early years, but if it starts to fade and Rich starts to dominate, we will review it.
The Rich company ethos is to be lean, fast, flexible and entrepreneurial and we will maintain this with aggressive disciplined management. We want management focusing on critical areas to bolster long-range plans.
How is Rich’s business different in the UK to the US?
In America, Rich’s turnover is $1.5bn – led by foodservice bakery and premium frozen products. In the UK, there is an even balance between frozen and fresh daily. Turnover is £20m, up from £10m before the David Powell takeover.
The UK is the most mature market in the world and very dynamic. Everyone is trying to jump on a bandwagon of what’s new. We want to exploit growth areas – such as speciality, ethnic, indulgence and convenience.
I understand you have set out “pillars” of success for the UK business – would you share these with British Baker?
There are five pillars of Rich Products’ business plan in the UK. The first is harnessing personnel expertise, globally and locally, to obtain the right skills and make sure we have the right people in the right job. This will give us a clear line of sight in meeting our overall objectives.
The second is product leadership of the Rich and David Powell brands – this is really key. We need to engage customers with the physical products during the development stage and keep them involved to meet expectations and maintain differentiation.
Third is customer intimacy, engaging with customers to find out the exact brief. We have to be at one with customers. Next is operational excellence so that we are able to streamline while maintaining an artisanal touch. There is overcapacity in the industry and flexibility is the single biggest component in maintaining efficiency. We have an operations director and have installed IT processes and systems from Rich in the US – covering areas such as processing and waste.
Finally, finance and IT are key to strong revenue and profitability. We have spent £200,000 on systems for functions including planning and measuring, supported by Rich in the US.
What is the future for UK bakery?
The coffee culture has changed consumers’ perceptions of price points. Nowadays, consumers are not scared to pay £1.50 for a muffin. The price has risen, but you have to deliver value.
I take my hat off to Greggs; high street bakers should take a page out of its book. It was a high street baker but now it’s more a lunchtime sandwich takeaway. It’s all very well to complain about high street rentals, and these are strangling the bakers, but in order to be a success, you need to steal primary customers.
Your job as European president must involve quite a lot of travel?
As European president, I travel around Europe and Russia and spend a fair amount of time attending regular meetings in China, South Africa and Mexico, as well as the USA. We are two or three years behind America in the UK, so it is good to keep an eye on what the trends are. I have lived my life on four continents, while working for Unilever, but I have been a UK resident for 12 years; I live in Surrey with my wife and son. We moved to Cobham from Japan, where I was with Unilever, because it had an American school for my son.
What do you do outside work?
I love to travel as much as possible. I have been a passionate surfer for 40 years, and I have travelled the world looking for the perfect wave. I love going to rock gigs, my son Sam is in the signed band The Ga Gas. My wife and I also love films.