Full-scale turnaround for Seabrook crisps
When former Vimto boss Jonathan Bye was appointed to the helm of Seabrook Crisps in May 2012, his intray was bulging. And it didn't make for pretty reading.
The family-owned Yorkshire manufacturer had just posted a loss of £1.8M and, according to a report from its directors, was in choppy waters due to unsustainable promotional tactics.
Sales were down, volumes had been slashed and the business clearly needed a life raft.
That said, speaking to me in his Bradford head office, Bye admits to initially being a little taken aback by the scale of the challenge he found.
“Although I was in no doubt throughout the interview process that the business had run into a difficult period after having some great times, I probably didn't fully realise the magnitude of the challenge,” he says, grinning.
Full-scale turnaround (Return to top)
It quickly became apparent that a make-do- and-mend approach was not going to be sufficient. “This is a full-scale turnaround job,” he reveals. That said, it doesn’t seem to have fazed him. Born in Middlesbrough and a self-styled champion of the North, Bye is chatty and jovial but he clearly has a steely determination to succeed as well.
The first thing on his agenda was to get burgeoning costs under some semblance of control. The cost of potatoes, oil, flavours and staffing were rapidly increasing and he inherited a situation where the firm had more potatoes than it could sell.
“It’s very difficult to know, when you haven't been here in that period, how things have got to a certain position, but we've tightened up on areas of risk management,” he says.
“The business did well while prices were favourable but, unfortunately, when pricing wasn’t as favourable, some of the controls and procedures weren’t in place. We've had to address that in terms of supplier contracts and, in relation to staffing, by not renewing some agency positions.”
This period of soaring cost inflation was coupled with most of the supermarkets selling multipacks of crisps for £1.
“At the end of the day, we’re not in a position to rewrite the retailers’ trading strategy, so the decision was taken, understandably, to pull back on a lot of those promotions because money was been lost. The flip-side to that, of course, was that volumes began to fall meaning the cost base was out of line with the margins being generated,” he outlines. One quick fix to get the business back on track was to slash the number of the flavours in the brand's range from 14 to six.
While this prompted some squeals of discontent from customers on social media, Bye says it was imperative to tighten factory costs in terms of ingredients and stock.
“When you are trying to get your costs under control, unless you’ve got big throughput through the factory, having a plethora of flavours is a negative rather than a positive,” he says.
Tough decisions (Return to top)
While evidently not afraid to walk in and take some rapid, tough decisions, Bye says it was equally important to set a clear long-term vision and strategy for the business and make sure everybody was signed up to it. Clearly, not everyone was prepared to jump aboard.
“Unsurprisingly there were some people in the commercial areas who were aligned to the previous team, which you can understand. It had been a tough two years and I was very straight with people and said you are either on the bus or you are not, you can’t be between the two.
“You have to be upfront with people and a number of them chose to go.”
With new people then taken on, including Kevin Butterworth from Kellogg as marketing director, Bye made it the company’s vision to produce the nation's favourite crisp.
And he thinks he can get there, in the first instance, by driving further distribution in its “northern heartlands”, particularly in the convenience sector, before gradually spreading its reach further afield.
Following a similar course to the one he sailed at Vimto where he was instrumental in doubling the brand to £60M over four years by strengthening in its core area of the north west before expanding nationwide he wants Seabrook to stop seeing itself as a regional brand, but a national one with a strong regional base.
“If you take the M62 corridor, from the north west, through Yorkshire and then up the A1 to the north east, the brand is extremely strong,” Bye argues. “But it quickly became clear to us that, even in our northern heartlands, there is massive brand distribution to be won. Now these are quick-win opportunities in areas where the brand is already very well-known and loved.
Determined to be a national brand (Return to top)
“Looking ahead two or three years further down the line, we are also determined to be a national brand, pushing on from our strong regional base.”
But isn't that what the previous management team sought to do, leading to that accusation of pursing an unsustainable promotional strategy?
After all, up to 2011, Seabrook secured significant distribution gains in the south, especially with Tesco. There was even talk of building a second, southern factory to drive further growth. Bye who also counts Pataks amongst his previous employers tries to be diplomatic, but he clearly sees some big differences between the old and new regimes.
“The aspiration was right,” he says, “In the sense they, like us, wanted the brand to be as big as it is up here in the rest of the country. However, I don’t think the foundations were there.”
He says there was little understanding of who the firm's core consumers were or why people were attracted to the brand. This lack of “basic understanding” meant that any distribution gained was quickly lost “because there was no money to invest and promote the product.”
“Our plan is to take it nationally, but at a slightly slower pace,” he adds.
In an attempt to garner a better understanding of who buys Seabrook crisps and why, Bye has overseen a full-scale brand review and relaunch.
The outcome is that Seabrook will focus on its core audience of 40- to 55-year-olds, especially housewives, meaning there won't be any marketing “fads, trends and gimmicks for teenagers and younger adults”. What the business will seek to do, however, is better exploit its Yorkshire heritage.
Yorkshire (Return to top)
“Our ‘Lovingly made in Yorkshire’ marketing and branding campaign has been the biggest single project we’ve undertaken,” says Bye.
“The country has a fantastic view of Yorkshire at the moment. The great thing for us is that we've been here for 68 years, our entire heritage is Yorkshire, but we've never really made as much of it as I thought we could have done,” he adds.
The last 18 months have clearly been one of upheaval and intense activity for Seabrook, but is it starting to reap any rewards?
For the year to April 2013, the firm recorded a small loss. However, Bye says it has been making profits every month since March and fully expects its 2014 figures to be comfortably in the black.
He's not resting on his laurels though.
“We could and should be making more [profit]. That said, being back in profit is good for the banks, good for staff and good for the trade because they wanted to see we were going to survive,” he says.
Now he’s steadied the ship, he is hawkish about the prospects for further growth, even in a highly competitive sector dominated by Walkers.
“Crisps are even more promotionally driven than soft drinks. Some of Walkers' products are never off promotion, so it is up to us to respond to that,” he says.
“It’s almost David versus Goliath, but if we can do with Seabrook what we did with Vimto, then I'm sure everybody will be happy.”
Bye is bullish about the future, but can he still double the value of the brand, like he stated when he was appointed? Listen to our exclusive podcast to find out.