In these uncertain times for the bakery business the Finsbury Food Group's profits have soared by giving people what they want, says Chief Executive Dave Brooks.
The Group's financial results for the six months to 31 December 2007 show that revenue was up a whopping 91 per cent to £82.76m (about €108m) compared with the same period the year before, while operating profits were up 150 per cent to £4.48m and gross profit was up 95 per cent to £2.61m. In an exclusive interview with BakeryandSnacks.com Brooks said that several years ago the company did an extensive consumer trend survey which confirmed what customers were looking for. The company says it has been giving its customers what they want ever since.
Healthy options, premium products, celebratory cakes Finsbury Food's survey highlighted that customers were looking for healthier options, quality goods and celebratory cakes. Brooks said that the focus on these 'value-added' sectors has helped enable the Group to raise prices three times to off-set higher commodity costs.
Evidently people looking to buy healthier products are not usually only concerned about cost and the same is true for those buying premium products and celebratory cakes. Brooks said that the health and premium products sectors complement each other. Many customers may seek the healthy alternative but once or twice a week might like to indulge in something more luxurious. These people are looking for "good value for calories", something Finsbury Foods says it offers.
The Group hopes to re-launch its Weightwatchers product brands later this year. The Group's acquisition of Anthony Alan Foods in October 2007, one of the UK's leading suppliers of low fat cakes, gave it the right to distribute under license from Weightwatchers products bearing the brand name. It also plans to re-launch its Thorntons brand products. The Lightbody Group, which was acquired in February 2007, has exclusive rights to the Thornton's brand and Disney party cakes. It is the UK's leading supplier of celebration cakes to UK grocery multiples.
Meanwhile Memory Lane Cakes is the mainstay in Finsbury's focus on premium retailer branded cakes and the brand has seen a sales growth of 16 per cent. Commodity Prices
Brooks said that he foresaw turbulence in the commodity markets for the next twelve to eighteen months, and it was likely that not all bakery companies would find it possible to pass costs on. According to Brooks Finsbury's ability to reformulate products on a regular basis has helped it weather the commodities storm. Finsbury is proud of its ability to innovate and adapt.
He said that Finsbury had "as good a chance as anyone" of controlling overheads, passing on costs and maintaining margins because of the Group's good market position. Finsbury's Future
Brooks said that the Group sees great potential for continued growth in its Nicholas and Harris bread line, which represents the ability to produce hand crafted products using artisan baking techniques is producing flavours that customers really appreciate. Artisan and innovation techniques have enabled the development of 'clean label' breads, breads without preservatives and to add to this Finsbury Foods have perfected a way to ensure a longer shelf life that makes these products very attractive to retailers.
To take advantage of this potential the Group announced yesterday a £2m capital investment programme to equipe an empty 20,000 square feet (1800m2) bay in United Central Bakeries. This is due to come on line in October 2008 and be fully operational from 2009. The Group's Chairman Lord Saatchi said in a statement that Finsbury Foods will continue to review the bakery market for additional acquisition opportunities with a particular focus on the health end of the market.
He added that the: "growth experienced in the first six months of the year is expected to continue in all businesses."