Confectionery company Lees Foods says is on the acquisition trail to further boost its profile in the bakery industry after recording bumper profits last year.Chairman and MD Raymond Miquel said the company was “actively looking” at possible acquisitions and has considered several possibilities.“We are actively looking at possible acquisitions and have considered several possibilities to date,” said Miquel. “While none have come to fruition at this stage, we continue to pursue our objective of finding companies which will enable us to expand in the food industry.”The company, which floated on the AIM stock exchange last year owns Lees of Scotland and The Waverley Bakery. It announced last month that it saw pre-tax profits rise 21% to £613,916 on sales up 5% to £13.4 million for the year ended 31 December 2005. Miquel said the figures were satisfactory considering the extremely competitive market and the substantial cost increases which it had had to absorb – includinng raw materials, packaging and labour. He said the figures had been achieved in part through a new product development programme, with the introduction of a new tub range of mini snowballs, snowcakes and meringues, as well as a new Raspberry Coconut-Ice Bar.Miquel added that sales for the next six months should be in line with last year although Lees would continue to be faced with cost increases which it could not pass on to customers.Lees makes snowballs, teacakes, confectionery and meringues for most of the major food retailers including Tesco, Asda, Somerfield, Morrisons, Sainsbury, the Co-operative Society, Makro, Aldi and Farmfoods.
Icelandic firm Bakkavor claimed to be the UK market leader in speciality bread, wraps and pizza as it released results for the first nine months of 2006 last week.The company said it was now market leader in nine of the 17 categories it operates in, and 82% of its business was in the UK.Bakkavor acquired desserts specialist Laurens Patisseries this May and speciality bread company New Primebake in July. It bought the Geest fresh produce and convenience foods business in 2005.It said sales of its chilled desserts were growing at five times the rate of the overall market, by 18.9% in value. This was due to its broad product mix in growing areas such as family-sized desserts, it said.A focus on consumer trends, such as the demand for traditional Italian pizza, meant Bakkavor’s pizza sales were also well ahead of average sales growth, it said.The group’s sales growth in speciality bread was hit by a fire in April 2005, which destroyed facilities at a former Geest site. The acquisition of New Primebake was improving its position, it said. The group is still waiting for an insurance payout following the fire and expects to get around £20m.Pre-tax profit was up 69% to over £46m in the first nine months of this year. Sales were up 89% to over £890m. Bakkavor also announced it is dropping the Geest name and the business will use a new look Bakkavor corporate identity.
Buxton Spa Bakery has seen control of the family-owned company pass to a third generation, following a management buyout.Chairman Peter Higgins retired and handed over full control of the £5 million turnover business to his son, the current MD, Mike Higgins, who said he plans to focus on developing the business’ range of luxury, premium products. “We are now implementing a strategy to target further growth in our own-label operations and will continue to secure opportunities for our Holmfield Bakery brand,” he added.Buxton Spa Bakery employs 120 people and produces over a million own-label cakes for supermarkets and convenience stores.including Morrisons, Co-op and Tesco. It also owns the Holmfield Bakery brand which supplies Aldi, Somerfield, Nisa and Kwik.The management buyout deal was led by Jeff Barber of McInnes Corporate Finance and was funded through Lloyds TSB Commercial Finance.
Logistics company Christian Salvesen is to be sold to French rival Norbert Dentressangle Group for £254.4m, ending a decade-long saga of takeover bids and restructures.Northampton-based Salvesen, which distributes for bakery companies including Manor Bakeries and Vandemoortele, has 200 sites in the UK and Europe.Norbert Dentressangle said the deal would create a European transport and logistics leader, with combined sales of €2.9bn.The deal would make the new group stronger, particularly in distribution and refrigerated and frozen logistics, it said.Christian Salvesen chairman David Fish said the two companies had “a strong strategic fit”.
If you indulge in ’income-shifting’, such as between husbands and wives in business, it seems the taxman will take an increased interest in your affairs from April 2008 – and may well shift a further tax bill your way.This is prompted by a recent consultative document from HM Treasury and HM Revenue & Customs (HMRC), pointing towards new legislation to take effect from April. The intention is to reverse the effect of the ’Arctic Systems’ decision – a case that involved husband and wife taxation and the dividing up – or ’shifting’ – of business income and profits.HMRC will expect to see that the participants in a business get a fair reward for their own efforts. So, if two people are involved in the business and one does four times as much ’value’ as the other, that suggests a 4:1 ratio of salary. Salaries should also be near market rates. It does not mean that all profits have to be paid out as salary – profits can be left over and shared equally.unacceptable traitsHMRC’s consultative document lays down conditions that make up unacceptable income-shifting:a. someone (’individual 1’) is party to, or has power over the arrangements, ie how the business has been set up;b. individual 1 forgoes income which goes to individual 2;c. individual 1 can control the amount shifted;d. the income shifted is the distributions of a company or profits of a partnership.All four conditions must apply and a tax saving must result from the arrangements. Here, HMRC would assess the shifted income as if it still belonged to individual 1.Take the case of a small com-pany, equally owned by husband and wife, where the husband does all the client work and the wife does the ’back office’ – the situation in the Arctic case. HMRC’s contention is that it is the husband’s business, and so condition a is met. If both just take a small salary, which means significant dividends flow to each party, condition b is met, as some dividend income has been ’forgone’ by husband. They assume that c is met as husband could insist on a bigger salary; d is clearly met. Assuming some of the income would otherwise be taxed on the husband at 40% means there is a tax saving; and HMRC would argue that the husband wouldn’t set up this arrangement with a stranger, so this cannot be excluded under the ’commercial’ get-out.The result is that this will be an income-shift – and the monies that flowed to the wife over and above reasonable pay for her administration duties will be taxed on the husband, not on her. Arrangements involving children, wider family and friends could also be caught and the asset-backed business that was accepted as outside the HMRC target zone for the Arctic attack is now firmly in the sights of these new rules.Managing the situationFactors to take into account in terms of value to the business include capital introduced, such as loan guarantees and other connections that have helped the business. There will also be a need to keep an eye on changing inputs of effort by those involved: one of the HMRC examples points to a situation where one partner stops working for a spell, meaning that the profit sharing should alter, otherwise income-shifting will happen. One hopes that HMRC will make allowances for circumstances such as illness and pregnancy.Although the consultative document says that HMRC would not expect further documentation to be needed to prove a situation is outside income-shifting, it seems inevitable that businesses will have to get better at documenting how they have valued indivi- duals’ contributions. nl John Whiting is a past president of The Chartered Institute of Taxation (CIOT) and chairman of the CIOT’s Management of Taxes Sub-committee
bakery market was worth £42m in the year to November 2007, representing a small proportion of the total organic food market in the UK, which stands at £2bn.The new research, conducted by Leatherhead Food International, also found that organic bread is worth £26m, up 25.3% in the past year.The report, which was commissioned by ingredients supplier British Bakels, claimed that “significant expansion of the organic bread market could be held back by a lack of local wheat supplies”. Most organic wheat is imported from Canada, the Ukraine and Kazakhstan.”Bread lags behind other food products in terms of share of consumer spend,” said Paul Morrow, MD of British Bakels. “If we were to achieve the same share for organic bread of the retail market as the majority of other organic products, sales would virtually double.”The report found there has been limited activity in the organic cakes market. “Consumers shopping for cakes are more likely to base choices on convenience or indulgence than ethical concerns,” said the report.See 1 February, 2008, issue for more on the organic market.
So you’ve undertaken a green audit, embarked on an energy efficiency plan and explored eco-friendly packaging. How else can you make your business more ethical? Consider looking more closely at the core of your business – at the products you sell.How can you be sure that the coffee in your signature blend or the nuts in your top-selling traybake are sourced from companies that give workers a fair deal? Selling Fairtrade-certified products will give you and your customers that reassurance. Whether you are making your own products from raw ingredients, or sourcing them ready-made from a supplier, there’s a way to fit Fairtrade into your sales mix.A recent report found that people want to see more Fairtrade available in cafés, restaurants and pubs (34%), in local shops (32%) and while on the move (25%). So stocking Fairtrade could help you to attract new customers – particularly if you publicise the move well.Fifteen food categories now have Fairtrade standards, from basics such as chocolate, cocoa, sugar and dried fruit through to finished goods, such as biscuits, cakes and cereal bars, as well as tea, coffee and hot drinks. So there’s bound to be one relevant to your business.The Fairtrade Foundation (FF) says Fairtrade is “about better prices, decent working conditions, local sustainability, and fair terms of trade for farmers and workers in the developing world”. Fairtrade farmers get paid a stable amount, regardless of the going market price. “Fairtrade addresses the injustices of conventional trade, which traditionally discriminates against the poorest, weakest producers. It enables them to improve their position and have more control over their lives,” says the FF.== International standards ==For a product to display the Fairtrade mark, it must meet international standards set by the Fairtrade Labelling Organisations International. The report by the FF (source: TNS CAPI OmniBus May 2008) shows more consumers than ever recognise the Fairtrade mark. Recognition is now at 70% – a leap of 13% from the year before. One in four consumers now regularly buy products carrying the Fairtrade mark, the report says, while 64% of the population link the mark to a better deal for producers in the developing world.The wave of pro-Fairtrade consumer opinion is increasingly influencing the buying patterns of manufacturers, bakery retailers and cafés.Cheshire bakery Chatwins has just made the switch to Fairtrade coffee and tea in all of its 45 shops and coffee lounges. Chairman Edward Chatwin says the company had noticed a growing number of customers asking for Fairtrade. “Not a vast amount – but the customers that were asking for it were quite vocal and passionate about it,” he says.The final push was a decision by the authorities in Alsager, Cheshire, where Chatwins has a branch, to adopt a Fairtrade policy across the whole town. Once the decision was made, however, Chatwins took its time to find the right supplier – eventually opting for Liverpool-based MCS Coffee.Price has also played a part. “The difference between Fairtrade and normal coffee prices is smaller than it was,” Chatwin adds.Both Greggs and Eat have worked with the FF to develop their own branded POS and packaging featuring the FF’s logo. The FF’s business development manager Samantha Dormer suggests that bakery retailers and cafés highlight the Fairtrade goods they sell by including information on table menus and menu boards. “Putting up storyboards with information about the producers is also a good way of linking the consumers with the producers,” she says.== Making a start ==If you’re thinking of dipping your toe in the water of Fairtrade, it’s a good idea to start with tea and coffee. In this way, you can up your ethical status with consumers, without taking the risk of a full switchover. You will also be able to monitor consumer demand and response, which will help you decide whether there’s a hunger for more Fairtrade lines.So what should you consider? Leon Mills, marketing manager of Tchibo Coffee Service, says bakery retailers and café owners must ensure that the quality of their Fairtrade coffee is at least as good as their current brand. “The taste of the coffee must be what customers want. If it isn’t, then you will lose customers. Our Vista brand is a good choice – not just because it’s a Fairtrade brand, but it also has chocolatey, nutty aromas.”There has been increased demand from the education sector and from younger people, Mills says, adding, “There’s also been a drive from the in-home market – supermarkets are selling Fairtrade products and that has driven consumer awareness”.== Out of Africa ==Another supplier pursuing Fairtrade is Percol, part of Food Brands Group, which has been producing Fairtrade coffee for almost 20 years, and has just boosted its trade offering with the launch of an African range of tea, coffee and hot chocolate. So far, only the teabags are available to trade (through Amia Foods), but Percol also offers an extensive selection of Fairtrade coffee beans from other continents plus instant coffee, tea and hot chocolate.Percol founder, Brian Chapman, says he has had a long-term dream to create a range from Africa “and, at the same time, help some of the more disadvantaged there”. He adds: “We’ve created an extremely exciting initiative – we have married the best ingredients we could find with a genuine project that is going to impact people’s daily lives.”Staying with coffee, ingredients supplier S Black has added triple-certification – organic, Fairtrade and Rainforest Alliance-approved – coffee extracts to its portfolio. The fully-soluble extracts are suitable for bakery, chocolates, desserts, drinks and dairy.S Black’s technical sales manager Richard Bacon says he expects organic and Fairtrade products to continue growing in the UK market. “Using S Black’s coffee extracts can help food manufacturers be seen as offering something more premium and indulgent, as well as more ethical and green,” he adds.Moving on to sugar, Tate & Lyle has announced its intention to gain Fairtrade accreditation for its cane sugar products. Or why not consider Fairtrade cola (www.ubutu-trading.com), cereal bars (www.dovesfarm.co.uk) or ready-made cakes (www.handmadecakecompany.co.uk). That’s just a snapshot of what’s available in the market; for a full list of Fairtrade suppliers see [http://www.fairtrade.org.uk].There’s no excuse not to get cracking – the evidence suggests that if you don’t start to offer Fairtrade options, it’s only a matter of time before your customers vote with their wallets and go somewhere that does.—-=== Summit explores stance on CSR ===Fairtrade Foundation director Harriet Lamb will be one of the top speakers at British Baker’s Baking Industry Summit on Corporate Social Responsibility (CSR) on 27 November. The conference will examine how to start building a CSR strategy and what government, consumers and the supermarkets are asking for. It will seek to supply some answers as to how easily you can build CSR into a sustainable business strategy – and examine the business benefits that this can bring. Speakers will include packaging and waste experts who have tackled specific bakery-based issues head-on and are ready to share their experiences. See [http://www.bakingsummit.co.uk] for further details. To book, contact Helen Law at [email protected] or phone 01293 846587.
Bakery exporters are gearing up for a huge increase in orders from the Continent and North America, as the fall in the value of the pound makes their products more competitive compared to foreign rivals.While the falls in the value of the pound against the euro and the dollar are bad news for UK bakers that rely on imported ingredients, equipment and packaging (see feature pg 14), British bakery products have become far more attractive to foreign buyers.Colchester-based frozen desserts company Indulgence Patisserie, which supplies retailers in France, said it had seen a huge increase in interest from European buyers after the dramatic rise in the value of the euro against the pound, which, since November, has risen from around 80p to 95p.”The rising euro has increased some of our ingredients costs but has also led to an upsurge in export enquiries from countries as diverse as France, Australia, Germany and Turkey. Export sales in December were up 500% year-on-year and we anticipate this trend will continue throughout 2009,” said MD Angus Allan.Cornwall-based biscuit and fudge company Furniss, which already supplies French retailers and has a stand at the upcoming ISM trade exhibition in Germany, is also expecting a good year for exports. “At the last ISM, buyers felt our products were expensive, due to the strength of the pound,” said national accounts manager David Roberts. “This year we are much more competitive and hope to increase sales abroad. We have already had interest from Europe, the US and Canada.”Exporters of traditional British products, such as pies and pasties, generally bought by ex-pats and British holiday-makers see the fall in the pound as a double-edged sword. While their products are more competitive, there are fears that the number of Brits taking foreign holidays this year could be well down.
The national bakers buying group Bako has decided on a radical restructure of its group purchasing division, following a strategic review by its directors.Two new purchasing divisions – Northern Purchasing Division and Southern Purchasing Divi-sion – will be created. These will be based at Preston in the north, while in the south, group purchasing will be electronically shared between Swansea, Wales, Cullompton Western and Merton, London.Former chief executive David Armstrong, who reported directly to the board and recently left to work for supermarket group Asda, will not be replaced.The original Bako Central Purchasing and Marketing Division, located in different offices in Preston, has closed. The functions have been allocated to the new divisions. A minimal number of staff at Preston are in consultation about jobs, but there will also be some redeployment. Two new positions have been created at Bako North Western in purchasing and one will be created at each of the three southern locations.Six regional Bako sites provide ingredients, packaging, equipment and finished products to craft and wholesale bakers throughout the country. These are based in the North West at Preston; the North East – Durham; Glasgow – Cumbernauld; Wales – Swansea; Exeter – Cul-lompton; and London – Merton.Acting Bako chairman John Waterfield, MD of Waterfields of Leigh, Lancashire, with 48 craft shops, told British Baker: “Waterfields has been a member of Bako for over 30 years. This is a very positive step forward – not only for Bako, but also for suppliers and customers. The closure of the central buying offices at Preston will reduce overheads and enable the Bako companies to give a better service. The move will also allow each Bako region to build a closer working relationship with suppliers and customers.”He continued: “The glue that helps hold Bako companies together is its own-label products. The change will also enable North and South purchasing to develop Bako brands, which have increased over the years and now account for over 25% of total sales.”
European frozen bakery sup-plier Lantmännen Unibake has increased its share in Bakehouse, and now has a majority stake in the bake-off supplier.It has increased its share from 25% to 63.25% for an undisclosed sum. With this purchase it hopes to strengthen its position in the UK, which is now its largest market.It is Lantmännen’s second major investment in the UK bakery market in the last year, following its acquisition of Eurobuns in May 2008. This acquisition gave the firm the ability to start production in the UK for the first time. Lantmännen CEO Bent Pultz Larsen said the agreement with Bakehouse comes as a natural extension of the Eurobuns acquisition.Bakehouse, based in Surrey, will continue to operate independently, producing sweet and savoury pastries and speciality breads.Marketing director Kate Raison told British Baker that it will very much be business as usual for Bakehouse. “The relationship provides us with access to the many factories that Lantmännen owns in Europe and we will continue to work with them and our other partners overseas, to provide a single point of contact for a wide range of products,” said Raison.”It will also enable us to continue supplying products to Bakehouse Australia, which has been a huge success for us, and to consider other markets in due course.”Bakehouse has plans for considerable growth in the UK and an exciting NPD programme in place for the next 18 months and beyond, she continued. “We have plans to develop all of our chosen market channels – retail, wholesale and foodservice – through optimising our knowledge of the market and forthcoming NPD.”