Bakery giant Delice de France’s MD Ian Toal appears remarkably upbeat on the morning that we meet especially given the fact that Delice’s parent group, Aryzta, announced downbeat trading results that were more a Déplaisir de France the same day. Performance in the UK and Ireland was cited as a drag on the group’s fortunes, with operating conditions described as especially tough, contributing to a 10% drop in revenue in its European division in the six months to 31 January.
On the face of it, things looked grim. Since Toal took charge of the biggest player in the bakery foodservice market two years ago, Delice has been walloped by the recessionary collapse of the UK’s hospitality sector. The exchange rate ramped up the cost of bringing in goods from Europe. And the country’s biggest wholesale food-service operator Brakes launched a specialist bakery division 12 months ago, to go head-to-head with Delice and wholesale rival 3663. At the same time, Delice was undergoing a tough period of restructuring, following the merger of its former parent company IAWS with Swiss baking giant Hiestand in 2007.
"When you see the future results being published, you’ll see that all the reshaping we’ve done will start to pay dividends," says an unfazed Toal. Delice is coming off the ropes with a strategy to mark its 25th anniversary this year, which Toal claims will give it a clear advantage in the market: it is no longer simply a distributor of products, like its rivals, but a large-scale manufacturer too. A massive plant claimed to be the most state-of-the-art French and speciality bread plant in Europe was built in Dublin 18 months ago at a cost of E200m (£177m), adding to the group’s 22 substantial baking sites around the world. The La Brea branded in-store bakery breads are now made there on its highly automated bulk fermentation line.
"What I would say is [the UK] is seeing good trading figures now," he says. "We’re through the worst of our own experiences. We’ve been through a whole learning curve. It’s not that easy to go from being a wholesaler to a manufacturer. We’ve invested heavily in equipment and plant, but also in skills, working hard to get some of the best bakers around. But we’ve had to go out and get a lot more customers because the market is still quiet. It has been a real journey, but we’ve come out of it really quite excited; we’re doing ok, but more importantly, we can see a vision for the future."
Since taking charge, Toal has aligned the business more clearly around trade channels and types of outlet, explaining that what works in a school wouldn’t work in a coffee shop or hotel. "It would have been easy for me to bring people in from the outside and create a senior management team," he notes. "My key directors have all been with the business for many years. To change it with them has been more rewarding than to have changed it for them."
Even so, the threat from Brakes was significant. As an ex-Brakes man himself, how much did he fear them stealing Delice’s business? "When they first launched, we were going through that transition time and everybody looked at them and why wouldn’t they? because they were the new thing," he recalls. "We are partly responsible for that. We’ve built this massive bakery and merged with a half-a-billion-euro business, and all of a sudden, most of what we sell is our own. That capacity [in the market] hasn’t gone away. What it meant was that people like Brakes got a lot of what we used to sell before we started making it ourselves.
"But we’ve got 2,000 more outlets today than when Brakes launched La Boulangerie. We didn’t lose a major contract the whole time. Yes, a few little bits around the edges. But, if I’m honest, it made us speed up our transformation programme. We knew that we would be marginalised one day if we didn’t invest and control our own destiny. You cannot create products for people as easily if you’re going through three or four different third parties. If you’re a manufacturer, you should never be beaten by a wholesaler, because you have the manufacturing margin."
In fact, he defiantly states that Delice’s catalogue has around three times more products. "Everybody is pressured to get rid of range and reduce it down to a few SKUs. I’ve gone the other way, which some might think is madness."
Now published every six months rather than 12, to adapt more quickly to the market, it is more user-friendly with a picture against every listing; this change alone led to a double-digit uplift in sales of products that previously didn’t have an image. Delice also held prices, with French bread having been on a 10% free offer for over a year.
It has focused on the multiple uses of products and features tips throughout the catalogue. For example, one demi-baguette was developed to split into four for sharing. "We didn’t think anything new could be done with a demi-baguette, and then someone comes up with a great idea that has multi-uses. How can you take a breakfast croissant and use it as a sandwich carrier for lunch? How can you take an arctic flatbread and turn it into a salad bowl? I have people whose job it is to sit and think of 10 different ways to use that product."
This is all part of his drive to be more forward-looking rather than simply respond to trends after they’ve happened. Was this part of the job pitch two years ago? "I saw what I believed to be a sleeping giant that had not necessarily moved with the times a fantastic speciality business that had started to lose its way," he recalls. "I had a vision of getting us into a sharp shape in three to five years. The recession made us do that in two."
The positive outlook goes some way to explaining the sunny demeanour. "We might have been a bit dumb, fat and happy at one point, but we’ve become faster, better, leaner, without trimming the range back. We’ve come out of the end of a huge learning curve much, much healthier and much happier."
Delice de France at a glance
l Delice de France was born out of a coffee shop by Frenchman Philippe Signolet, who had a vision in 1985 of bringing continental goods into the UK. It is the UK bakery foodservice arm of Aryzta - a Swiss-based business born in 2007 from the merger of two bakery giants: IAWS and Hiestand Group. Delice’s sister company Cuisine de France, which covers the retail channel and features in some 4,000 convenience stores plus the forecourt network, also comes under Toal’s stewardship
l Delice has plants in Dublin and Kettering; Aryzta’s Viennoiserie is made in Germany, Switzerland and Poland; and the largest US cookie brand Otis Spunkmeyer is also part of the group while the La Brea brand has plants stateside
l It covers education, healthcare, pubs, hotels, restaurants and cafes - around 20,000 different outlets per year
l Distribution is direct on an ’order today for delivery tomorrow’ basis, six days a week
l It has 22 retail outlets run by SSP and ISS, in enclosed environments like train stations, with no plans for the high street