Inter Link teams up with the House of Mouse
baked goods market, and producers are continually looking for new
products to extend their presence in this sector.
One of the most popular means of doing this in recent years has been cross licensing, taking a brand, food or otherwise, owned by another company and producing cakes under its name. Thus, confectionery product names such as Kit Kat can now be found adorning cake wrappers, alongside television characters such Bob the Builder or Teletubbies.
The latest licensing venture comes from Inter Link Foods, which is already one of the pioneers in this sector. The acquisitive company, whose best known brand is probably Soreen malt loaf, has today announced details of a new agreement with one of the world's best known names - Disney.
Inter Link will now produce a range of gift and small cakes in the UK and Ireland using characters and branding owned by the US company, and said that work had already begun on a the range which would be available to retailers later this year.
Paul Griffiths, Inter Link Foods' group managing director, said: "The licence agreement with Disney will lead to 'major innovation and excitement' in the UK's fast-growing licensed gift and small cake sector. The overall UK cake market is worth over £750 million (according to AC Nielsen) and is growing at 4.5 per cent year-on-year.
"The licence agreement with Disney is significant as it will accelerate our growth and our stated intent to become the UK's second largest cake manufacturer within the next three years. Disney is the number one licensor in the world, and the agreement provides the perfect platform to produce an innovative range of cakes that is both accessible and affordable."
Inter Link said it would target the new Disney range of cakes at multiple retailers and also the convenience and independent sectors.
Details are yet to finalised, but the range of new products is likely to include favourite Disney characters such as the Disney Princesses (including Cinderella, Snow White, Sleeping Beauty) and The Lion King.
While the licensing agreement should certainly help Inter Link on its way to becoming the number two cake maker, it is not the only method being used. The company has been one of the most acquisitive in the UK baked goods market in recent years, and its rapid expansion shows no sign of letting up.
The company has today announced the acquisition of Farmhouse Bakery Holdings, a family-owned company based in Kent, south east England, for £5 million, a move which will give it control over the Hoppers Farmhouse Bakeries business which last year registered sales of £12.47 million and pre-tax profits of £788,000.
Farmhouse Bakery's business is currently focused primarily on Christmas trade and as such is only profitable in the second half of the calendar year, with approximately 60 per cent of its annual sales in the period from September to December. For example, Hoppers sold 35.7 million mince pies last Christmas.
Inter Link said that the acquisition would give it not only quality plant and machinery but also a range of seasonal products which are new to the group.
"Hoppers has a long tradition of producing excellent products which will complement Inter Link's current range. It is a quality business with quality assets and I am confident that it will grow rapidly by having the greater resources of the Inter Link Group behind it," said Alwin Thompson, chief executive of Inter Link.
Farmhouse Bakeries is just the latest in a long list of acquisitions by Inter Link dating back 10 years. In April 1994 it bought Crossfield Foods (sponge cakes and fruit pies), followed by Lisa Bakery (chocolate coated mini rolls) in December 1995.
In March 2000 the company bought Maid Marian (celebration and novelty cakes), adding Newton House Bakery (fairy cakes, cup cakes and Viennese whirls) in January 2001 and Cakes for the Connoisseur (marketing and distribution business) and the Creative Cakes Company (celebration and novelty cakes) in February and March.
June 2001 saw the purchase of William Lusty (slab cakes, loaf cakes, layer cakes), followed by a brief period of consolidation before the biggest acquisition so far - Soreen malt loaf - in February 2003.
Licensing agreements and acquisitions have both certainly played their part in improving the company's business, but Inter Link is also committed to driving organic growth through new product development, such as bite-size malt loaves under the Soreen brand, and said it planned a number of new offerings later this year.
All of which has contributed to the excellent first half figures also unveiled today. Turnover in the first six months of fiscal 2003 rose 35 per cent to £33.2 million, while pre-tax profits surged ahead 37 per cent to £1.79 million.