food and drink business europe

November 2010

Adams Foods looks to bright future

Food & Drink Business Website:

www.foodanddrinkbusiness.com

C o n t e n t s

- 21 M ARKET F OCUS

- 3 N EWS B RIEF

The future of the $7b international weight management market.

Business news from the UK and international markets.

P AGE 15

- 5 B REWING & D ISTILLING

PAGE 3

Indra Nooyi, ce, PepsiCo.

Developments in the global alcoholic drinks sector.

Neil Kennedy, ce, Milk Link.

- 23 B AKERY The continuing rise of Greggs.

R EGULARS

- 7 M ERGERS & A CQUISITIONS Coverage of British and international deals.

PAGE 17

Carl Ravenhall, md, Adams Foodds

Bottling & Packaging . . . . . . . . . 9-11 & 26 PAGE 5

R-Flute - Ringing the changes in retail ready packaging . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Javed Ahmed, ce, Tate & Lyle.

Processing & Manufacturing . . . . . 11 & 19

- 13 D AIRY

Cool stars unite to form Glacier . . . . . . . . . . . . . 11

Culture of growth at Muller Dairy.

PAGE 23 Materials & Ingredients . . . . . . . . . . . . . 11 Cargill innovation delivers first chocolate with EU reduced calorie claim.

Ken McMeikan, ce, Greggs.

- 15 & 18 N EWS B RIEF - D AIRY Developments in the international dairy industry.

PAGE 7

Paul Bulcke, ce, Nestle.

Managing Director: Colin Murphy Editor: Mike Rohan Sales Director: Ronan McGlade Advertising: Susan Doyle, Stuart Atkinson. Senior Sales Executive: Paul Lees Production Manager: Susan Doyle

Food & Drink Business Europe is published by Premier Publishing Limited, 51 Parkwest Enterprise Centre, Nangor Road, Dublin 12.

Tel: + 353 1 612 0880 Fax: + 353 1 612 0881 E-Mail: info@prempub.com

- 17 C OVER S TORY

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Adams Foods is new force in UK dairy.

Premier Publishing Limited can accept no responsibility for the accuracy of contributors’ articles or statements appearing in this magazine. Any views or opinions expressed are not necessarily those of Premier Publishing and its Directors. No responsibility for loss or distress occasioned to any person acting or refraining from acting as a result of the material in this publication can be accepted by the authors, contributors, editor and publisher. A reader should access separate advice when acting on specific editorial in this publication!

Expanding Irish dairy output by 50% would cost €850m.

- 21 C OMPETITIVENESS Food operators welcome moves to create an EU industrial policy.

PAGE 13

Design, Origination and Separations by Fullpoint Design (057) 8680873

Gharry Eccles, ce, Mullet Dairy (UK).

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BAADER Quality in all Phases!

Food Processing Machinery

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For Further Information Please Contact: Anders Lorentzen al@baader.co.uk Simon Jahnke simon@baader.co.uk

N N E E W W S S PepsiCo Plans to Invest $140 Million in New Beverage Plant in Russia Global soft drinks and snacks giant PepsiCo plans to invest $140m to build its tenth plant in Russia. The new plant will be constructed in the city of Azov, where the company recently completed a snacks plant.

Both plants in Azov are part of PepsiCo’s $1b investment programme in Russia, announced in 2009. In the previous ten years, PepsiCo invested $3b in Russia. Placing both plants on the same property will allow for more efficient logistics and leverage the advantages of production processes and technologies that save water and energy.

“Russia is one of our most exciting growth opportunities, and our $250m total investment in two plants in the Rostov region reflects our commitment to this key market,” says Indra Nooyi, chairman and chief executive of PepsiCo. “Our goal is to build a premier food and beverages company in Russia, and we are actively investing in manufacturing and logistics infrastructure to achieve that. Consistent with our ’Performance with Purpose’ vision, we also are broadening our portfolio by adding healthier products, implementing new environmental initiatives and taking steps to support the growth and development of our employees.”

PepsiCo has also announced that it will construct a $73m

beverage facility in Vietnam.

The move marks the first phase of a $250m investment programme in Vietnam. The new plant in the northern Bac Ninh province will become the global soft drinks and snacks giant’s biggest production site in Vietnam.

Puratos Invests €21m in Sourdough Production Puratos, an international group of Belgian origin specialising in the manufacture of raw materials for bakers, pastry chefs and chocolatiers, has just launched a new production unit for natural sourdoughs. Located at the group’s Andenne site in Belgium, it represents an investment of Eur21m. The objective is to accurately reproduce, on an industrial scale, the traditional baker’s methods of preparing sourdough. The investment in Andenne complements the other Puratos group sourdough factories in Saint-Vith, near the German border in Belgium, and in Cherry Hill, near Philadelphia in the US.

Florette to Open Production Facility in Gran Canaria French fresh salads producer Florette is reported to be preparing to commence production on the Spanish island of Gran Canaria. Florette’s newly constructed facility will have the capacity to produce 2m bags of salad per annum and is due to commence operations in December.

B B R R II E E F F UK Pensions Regulator to implement a deficit for equity swap together with a re-leveraging of the company to fund a partial share buy-back from the pension fund.

The proposed solution involves an effective transfer of 90% of the equity in Uniq to the Trustee in exchange for the Pension Scheme giving up its claim on the company. Uniq would also offer the Pension Scheme a put option to sell a proportion of its shares back to the company, at a pre-agreed price per share, for a total consideration of up to £25m to £30m, funded through the cash generated from the proceeds from the disposals of the businesses on the Continent. The final details of these proposals have yet to be agreed with the Trustee. The Pension Regulator rejected an earlier proposal in July.

“The improving performance of our businesses and the proposed final resolution of the legacy pension deficit through the deficit for equity swap will allow us to focus on creating value for the benefit of all our stakeholders including the Pension Scheme as the majority shareholder,” comments Geoff Eaton, chief executive of Uniq.

Uniq to be 90% Owned By Pension Scheme

Indra Nooyi, chairman and chief executive of PepsiCo.

Uniq has proposed a solution to its £436m legacy pension deficit which would involve the company’s Pension Scheme becoming the majority shareholder in the UK chilled convenience food processor with a 90% shareholding. The Trustee of the Uniq Pension Scheme and the company have concluded that the most appropriate solution would be to seek approval from both shareholders and the

Geoff Eaton, chief executive of Uniq.

Bonduelle Opens First Plant in Brazil French and international vegetables processor Bonduelle has opened its first factory in Brazil. Based in the state of Goias, the new plant is catering to a large and growing

FOOD & DRINK BUSINESS EUROPE, NOVEMBER 2010

canned-vegetables market and was designed for year round operation in high-altitude, tropical conditions. Repre-senting investment of Eur15m, the Brazilian factory employs 80 people and has an annual production capacity of 50,000 tons of canned peas and sweet corn.

Tangerine Confectionery Could be For Sale Tangerine Confectionery, which is owned by private equity firm Growth Capital Partners, has called in investment bank NM Rothschild to advise it on options for raising capital, raising the prospect that the UK-based sugar confectionery business could be sold off. “Five years ago we were planning for a stock market listing around now, but we think now is probably not the right time,” points out Steven Joseph, chairman of Tangerine Confectionery. “We are looking at a listing in two years, but in the meantime we would like to raise additional capital to take the company forward.”

Tangerine Confectionery was created through three key acquisitions within the UK since 2006. In January 2006, a management team with an established pedigree in the confectionery industry acquired Blackpool-based Toms of Denmark. This was followed soon after by the confectionery arm of Burtons Foods in August 2006, to create a £60m turnover business, committed to the production of both own label and branded confectionery for the UK and abroad. In February 2008, came the third and largest acquisition when Monkhill Confectionery was acquired from Cadbury Schweppes for £58m in cash. This instantly made Tangerine one of the UK’s largest sugar confectionery businesses and a leader in popcorn. The group now generates annual sales of more than £150m.

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N N E E W W S S Encouraging First Half by Tate & Lyle Tate & Lyle, the global sweeteners and food ingredients group, has reported an 18% increase in adjusted operating profit to £170m (up 13% in constant currency) for the first six months to September 30th 2010 as its specialist food ingredients and bulk ingredients businesses improved profits by 32% and 13% respectively.

Sales in the first half of the year increased by 4% to £1.35b (flat in constant currency), with volume increases offset by lower average net corn costs and lower unit margins within bulk ingredients and lower sucralose selling prices within speciality food ingredients.

Net debt has been reduced by £274m since March 31st 2010 to £540m, reflecting the sale of the EU sugar refining operations for £212m, as Tate & Lyle continues to pursue its ‘focus, fix and grow’ strategy. The sale of the remaining sugars assets is progressing to plan.

“Tate & Lyle delivered an encouraging performance in the first half of the year. In addition to good operational performance and steady demand growth in a number of our markets, we benefited from strong seasonal demand and improved co-product income as corn prices rose towards the end of the summer,” says Javed Ahmed, chief executive of Tate & Lyle. “We have also now achieved the full benefits from the single plant sucralose manufacturing footprint. We continue to take the necessary actions to focus, fix and grow our business as we build the platform to deliver sustainable long-term growth.”

Javed Ahmed, chief executive of Tate & Lyle.

Nestle On Track to Meet Full Year Expectations Nestle remains on track to deliver on its earlier forecast of full-year organic growth of around 5% combined with an EBIT margin increase in constant currencies in its food and beverages business. The Swiss company has reported group sales of SFr 82.8b, consisting of 6.1% organic growth, including 4.5% real internal growth, for the first nine months of 2010.

Food and Beverages sales reached SFr77.0b, with 5.7% organic growth and 4.2% real internal growth. Overall, Food and Beverages sales rose by 4.5%. The nine months sales reflect a continuation of the strong, broad-based growth seen earlier in the year, with the organic growth for both the group and the Food and Beverages business unchanged from the first half.

“The first half's growth momentum continued unabated in the third quarter, providing a good base for the full year as we face challenging comparatives in the final quarter," says Paul Bulcke, chief executive of Nestle.

PepsiCo Plans to Revolutionise its Farming with New i-crop Technology PepsiCo plans to roll-out globally its new i-crop farming technology that will enable the soft drinks and snacks group’s farmers around the world to monitor, manage and reduce their water use and carbon emissions, while also maximizing potential yield and quality. The webbased crop management system was developed by PepsiCo in conjunction with Cambridge University in the UK. Trials of i-crop are currently underway at 22 farms in the UK, where PepsiCo has ambitious plans to reduce carbon emissions and water usage by 50% across the farming of its core crops in the next five years.

The technology will be rolled-

B B R R II E E F F out throughout Europe during 2011, with planned introductions in Holland, France, Germany, Belgium, Spain, Portugal and Turkey. The company hopes to take it to India, China, Mexico and Australia by 2012.

BREWING & DISTILLING

Acquisitions Lift C&C Group as Magners Returns to Growth Reflecting the impact of acquisitions and a return to volume growth of its Magners brand in Great Britain for the first time since 2007, Irish cider producer C&C Group has reported a 29.4% increase in operating profit from continuing operations to Eur63.4m for the six months ended 31st August 2010 on net revenue up 73% to Eur305.5m. Acquisitions contributed operating profit of Eur15.6 m while the group’s disposed spirit business contributed Eur4.5m in the period.

Although the Magners brand grew volume by 1.6% year-onyear, Magner’s Northern Ireland volumes declined by 20.6% and the Bulmer’s volumes declined 3.4% year-onyear in a challenging Republic of Ireland cider market.

Operating profit in C&C’s original cider business declined by 1.8% to Eur47.9m. Group operating margin, as a consequence of new acquisitions, declined by 6.9 percentage points to 20.8% of net revenue.

During the first half, C&C disposed of its spirits and liqueurs business to Scotch whisky distiller William Grant & Sons for Eur300m. C&C also completed the integration of acquisitions - the AB Inbev beer business in Northern Ireland and the Gaymer’s cider operation in Great Britain.

Indeed, synergy targets have now been revised upwards to Eur8m for 2010/11 and to Eur10m for 2011/12 delivering total cost and revenue synergies

FOOD & DRINK BUSINESS EUROPE, NOVEMBER 2010

of Eur18m.

“Economic conditions in the group’s core markets of Ireland and the UK remain unpredictable and challenging.

Consequently, we are appropriately cautious in our outlook.

Despite the challenges, we are pleased to report the continued growth of the cider category in the UK and the return to modest volume growth for the Magner’s brand for the first time since 2007,” comments John Dunsmore, chief executive of C&C Group. “We remain confident of delivering to market consensus for operating profit in the range of Eur102-Eur106m for 2010/11.”

John Dunsmore, chief executive of C&C Group.

Diageo Strengthens Brewing Business Diageo has strengthened its beer business in emerging markets after its East African Breweries subsidiary acquired a 51% stake in rival Tanzanian brewer Serengeti Breweries for

Paul Walsh, chief executive of Diageo.

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N N E E W W S S $60.4m (£38.1m). The deal strengthens East African’s distribution in Kenya and Uganda.

Meanwhile, speculation has heightened that Diageo is considering a move to purchase the 66% of Moet Hennessy, the drinks business of French luxury goods group LVMH, that it does not already own.

Incorporating the Hennessy cognac and Moet & Chandon and Don Perignon champagne brands, Moet Hennessy would cost Diageo in the region of £10.8b.

developed globally with well established local partners. Yoplait branded products are currently marketed in over 75 countries.

Apart from Nestle and Lactalis, other potential suitors for Yoplait include Arla Foods and General Mills, which operates the Yoplait franchise in the US, along with a number of private equity companies.

European Brewers Face Malting Barley Supply Problems European brewers and maltsters are likely to face problems sourcing quality malting barley following poor harvests. Heavy rain during harvest time adversely affected grain crops in Germany, Scandinavia and many eastern European countries. Indeed, the size of the European Union barley crop, which is of malting quality, shrank to 10.05 million tones in 2010 from 14.45 million tonnes in 2009. Due to the shortage of supplies, marltsters and brewers will have to use lower quality barley.

MERGERS & ACQUISITIONS

Nestle Eyes Yoplait Deal Nestle is reported to be considering joining forces with French dairy group Lactalis to make a joint bid for Yoplait, the yoghurt producer. Yoplait has been in play following the decision by 50% owner PAI Partners, the private equity firm, to sell its stake. The other co-owner, French dairy cooperative Sodiaal, may also be willing to sell part of its shareholding in order to reduce debt following its recent acquisition of Entremont, the French cheese producer.

With sales of Eur3.8b and a gross operating profit of Eur120m in 2009, Yoplait is valued at between Eur1b and Eur1.2b. Using its franchise system, the Yoplait brand has been

Paul Bulcke, chief executive of Nestle.

Ebro Foods to Expand International Rice Business Spanish food group Ebro Foods is in negotiations to acquire Australian rice producer SunRice for an enterprise value of A$600m (Eur425m). Based in New South Wales and listed on the Australian Stock Exchange, SunRice sells approximately 500,000 tons per annum of branded rice foods principally through the retail channel and has leading positions in its main markets including Australia, New Zealand, the Pacific Islands, Hong Kong, Singapore, Papua New Guinea, the Middle East and California/Hawaii in the US. For the year ended April 31st 2010, SunRice reported EBITDA of A$56m. Ebro Foods expects SunRice to generate EBITDA of approximately A$70m in the year ending April 2011. It is anticipated that the transaction will be completed in March 2011.

Ebro recently sold its dairy business to Lactalis of France for Eur630m to concentrate on developing its core rice and other food activities.

Lamb Weston/Meijer’s Austrian Acquisition Approved The European Commission has

B B R R II E E F F cleared the proposed acquisition of a 74% controlling stake in Frisch & Frost (F&F), a producer of frozen and chilled products in Austria, by Dutch company Lamb Weston/Meijer. Currently, F&F is solely owned by Austrian company RWA International Holding, an international trading and services organisation that sells agricultural products and commodities as well as consumer products mainly in Austria, Hungary, Germany, Slovakia, Slovenia and the Czech Republic.

The Commission has concluded that the transaction would not significantly impede effective competition in the European Economic Area (EEA) or any substantial part of it.

F&F produces and sells frozen and chilled products, notably deep-frozen potato and dough products. It supplies the food service sector, fast food chains and the retail sector in Austria and has a limited presence in some Member States in Central and South-Eastern Europe.

Lamb Weston/Meijer produces and sells deep-frozen potato products and dehydrated potato products (potato flakes) and sells deepfrozen appetizers. LWM serves customers in the food service sector, fast food chains and the retail sector and is mainly active in The Netherlands, France, Germany, the United Kingdom, Spain and Italy.

Belvedere Disposes of US Spirits Production Business Belvedere, the French spirits group, has sold its US production business, Florida Distillers, for $48m. However, Belvedere will retain is US distribution business, which includes the 4 Orange and Sobieski vodka brands. Belvedere acquired Florida Distillers for $56m in 2007.

Eastern Condiments for $36m.

Based in Kerala, India, Eastern is a leading brand of spices, seasonings and other related food products in India and the Middle East which has grown rapidly since its inception in 1989. The business has operated profitably in each of the last ten years and achieved annual sales of $67m in the year ended March 2010 with the average annual growth rate exceeding 25% for the past three years.

Danone Completes Russian Dairy Deal Danone has finalised the sale of its 18.4% stake in Wimm Bill Dann Foods, the Russian dairy and food group for $470m.

Danone has held the stake since Wimm Bill Dann Foods’ IPO in 2002.

The closing of the transaction was subject to the grant of the required regulatory approvals for the merger of Danone’s fresh dairy products operations in Russia with those of Unimilk, Russia’s second largest manufacturer of dairy products and baby food. Established in 2002, Unimilk operates 28 production plants in Russia, Ukraine and Belarus and has 14,000 employees. Unimilk’s sales in 2009 amounted to Eur1b (up 7% on 2008).

Wimm-Bill-Dann will fund the purchase of its shares from Danone from existing resources and will not require additional financing. Founded in 1992, Moscow-based Wimm-Bill-Dann Foods has grown rapidly to become the largest producer of dairy, baby food and beverage products in its native Russia and the CIS.

McCormick Expands in India and the Middle East McCormick & Company, a global leader in spices, seasonings, specialty foods and flavours, has expanded its interests in India and the Middle East with the acquisition of a 26% minority stake in

FOOD & DRINK BUSINESS EUROPE, NOVEMBER 2010

Tony Maher, chief executive of Wimm-Bill-Dann Foods.

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I PACKAGING INNOVATION

R-Flute® – Ringing the Changes in Retail Ready lthough times are changing rapidly in A the retail end of the corrugated packaging market, it is very rare to be able to talk about a major breakthrough, but DS Smith Packaging’s new R-Flute® deserves that description, and more.

R-Flute® is a new type of corrugated fluting designed to help customers sell more, reduce supply chain costs and operate sustainably.

A meticulous development process has resulted in a profile in which the flutes are smaller and closer together than B-Flute, whilst optimising board strength. It is suited to many sectors and ideal for fast moving consumer goods. Compared with the widely used B-Flute, R-Flute® delivers better printing, better appearance, machine line efficiencies and dramatic savings in logistics, whilst continuing to offer the necessary protection.

Following an intensive period of design, development and trials in numerous applications, R-Flute® usage has accelerated very quickly. It is already the second most popular type of fluting bought by DS Smith Packaging’s customers and many more are keen to benefit.

The 20% Advantage R-Flute®’s calliper is 20% less than BFlute’s, so that 20% more corrugated can be loaded onto a pallet for delivery. This means up to 20% fewer deliveries to handle, up to 20% less storage space and correspondingly fewer pallet movements in the factory. All these percentage points add up to big savings for customers, in cash, space, operating time and carbon.

Ardagh is achieving a reduction of 142 tonnes of C02 emissions.

Success at Point of Sale Compared with B-Flute, R-Flute® offers a flatter, better surface for printing and presentation, a crucial advantage for more and

35% more product can be put onto a pallet inbound.

vative bake-in-bag product, The Saucy Fish Company turned to DS Smith Packaging Louth for the retail ready pack. DS Smith used R-Flute®’s superior performance in both print and pack construction to develop an RRP pack that perfectly complements the shaped inner cartons, holding them securely and in a way that presents the full face of the primary pack to the consumer. Additionally, because there is so much more packaging being delivered on every pallet, the result is 20% fewer vehicles on the road.

Ardagh Glass, a leading producer of glass jars and bottles, used the crush resistance of R-Flute® to bring their annual packaging weight down by 160 tonnes. This translates into a reduction of 142 tonnes of CO2 emissions. 1700 pallets have been taken out of the supply chain and 68 fewer trucks are needed for deliveries.

more customers as they seek brand appeal and sales success with shoppers in store.

In addition, the closeness of the flute tips helps perforated retail ready packaging to form squarely, open reliably and look good on shelf after opening, another big factor in competing for sales.

Performance Excellence As if great print is not enough, the excellent crush resistance of the R-Flute® surface makes it exceptionally effective for shipments of products in bottles, cans or similar containers.

On automated packing lines, some customers who have moved from B-Flute report productivity increases of up to 15%.

This is achieved via crisp, problem free folding and less downtime to feed new pallets of corrugated into the line, since each pallet of R-Flute® holds many more empty packs.

Proving Itself Some practical examples show how RFlute® has proved itself in very different circumstances. A range of wine packs for Constellation Europe has taken full advantage of R-Flute®’s superb printing characteristics to increase brand appeal at the point of sale. With significant focus on operational and commercial improvements, R-Flute® delivers supply chain optimisation characteristics. For example, 35% more product can be put onto a pallet inbound. This supports Constellation Europe’s commitment to reducing its impact on the environment.

When launching its award winning inno-

This pack results in 20% fewer vehicles on the road.

Who Will Benefit From R-Flute®?

As the level of interest accelerates still further from many different industries, DS Smith Packaging is taking care to deploy RFlute® in the right applications where it will deliver the right results. Tony Foster, director of DS Smith Packaging, says: “We’re confident that, by using R-Flute® together with our unique PackRight business tools, we can give customers a step change in packaging efficiency, sustainability and effectiveness. This is a radical development offering real supply chain cost savings and brand image improvement – our customers have been quick to recognise the benefits.” J

FOOD & DRINK BUSINESS EUROPE, NOVEMBER 2010

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Kliklok Hosts Conference For International Agents ackaging machinery company Kliklok International is celebrating the success P of its Agents Conference, which brought together agents and distributors from all over the world for an educational and informative 3-day event held in October.

Delegates from over 20 different countries took part in machine demonstrations, packaging application workshops, presentations, and discussions on new product development, technical innovation and marketing activities.

The company introduced its newest cartoning machines - the entry level KII hand pack cartoner, with stainless steel construction, powered hopper, hot melt glue system, text display screen and quick size adjustment. Plus the Smart-3 – Kliklok new economical, space saving 3-flap carton carton closer, featuring lugless design, colour touch screen, large size range and speed of up to 120 cartons per minute.

Kliklok also gave demonstrations of its popular SFR cartoner, Certiwrap C150 wraparound sleever, and QS shrinkwrapper. In addition, two comprehensive pizza cartoning lines were running in the factory, being tested before despatch to a major frozen food company in Australia.

These impressive, fully integrated lines consisted of two product infeed and diverting conveyor systems, six CLS Cascade

Loaders for collating and stacking pizzas from singles to fours, and two award-wining CELOX high performance end load cartoners, operating at speeds of up to 240 cartons per minute. The lines also included bar code scanners and unglued flap detect and reject units.

As part of the conference sessions, each delegate was asked to give a short presentation to outline their own business activity, with an overview of their company, and provide comments on issues like competition, potential markets, improving communication links, and future plans. This provided essential information to further understand the way Kliklok’s overseas markets behave, recognising packaging and production trends in different countries and cultures, and paving the way for stronger working relationships.

Chadwicks Gives Pina Colada Sweet New Sleeves

To give its international guests a night to remember, Kliklok hosted an evening dinner on board the SS Great Britain, which included a guided tour of the ship. As an engineering company based in Bristol for 40 years, Kliklok felt it was a fitting way to acknowledge the proud connection between Bristol and the inspiring legacy left by Britain’s most famous engineer, Brunel.

Managing director Bob Morley said: “Our agents conference was a great opportunity to establish a mutually beneficial working relationship, through the sharing of ideas and gaining information on Kliklok’s future plans and new developments.”

For further information contact Kliklok International on Tel + 44 (0)1275 836131 or visit www.kliklok-int.com J

National Flexible Strengthens its Ethical Credentials

eading shrink sleeve manufacturer Chadwicks has given ational Flexible, the Bradford-based company specialising in L Manchester Drinks’ Pina Colada a sweet new look to make it N flexible film packaging, has strengthened its ethical credentials stand out from the crowd. Innovators in shrink sleeves through actively Chadwicks has created a modern, bright sleeve for the cocktail from Manchester Drinks, which blends pineapple, banana, coconut and white rum to create a ready-mixed version of the world-famous cocktail.

The sleeves are printed using six colours UV Flexo on 50 micron film and a high opacity white was developed to minimise transparency.

Chadwicks is part of the Flexible Packaging Division of the Clondalkin Group, which has more than 40 manufacturing sites located across Europe and North America. For further information visit www.chadwickslids.com or call +44 (0)161 763 2100. J 10

working with Sedex, one of the fastest growing not-for-profit organisations dedicated to driving improvements in standards and practices on a global scale. As a long standing participant in the Sedex scheme, National Flexible’s Quality Assurance team has worked hard behind the scenes to develop a focused CSR policy which underpins the commercial activities of the business.

Independently audited, the company has become well known as the preferred supplier of packaging films for the food, bakery, snack, contract packing and pharmaceutical industries. To contact National Flexible’s commercial team call 01274 685566 or email sales@nationalflexible.net. J

FOOD & DRINK BUSINESS EUROPE, NOVEMBER 2010

Cool Stars Unite to Form Glacier lacier is a new range of equipment for Star Refrigeration. Glacier offers food the food processing industry, combin- processors a total in-line freezing and chillG ing a spiral freezer and refrigeration plant in ing solution from a single source market one complete package. The launch of the new Glacier range is the result of the unique partnership between equipment manufacturer Starfrost and parent company

leader.

As a spiral system, Glacier is suitable for freezing or chilling food items such as pizza, ready meals, poultry, meat and fish, as well as pastry products and desserts. Each Glacier package is designed, manufactured and installed to meet individual cooling requirements, with dual-purpose freeze/chill operation available.

Glacier features a range of spiral systems and associated refrigeration packages, with cooling capacities from 75kW to 450kW. Available with a range of belt sizes and tier heights, Glacier can be designed to process from 500kg/hr, to over 6,000kg/hr.

Starfrost managing director Neil Winney says: “The launch of Glacier will enable food manufacturers to benefit from the joint expertise of Starfrost and Star. Glacier

combines high efficiency equipment and robust engineering, with cutting edge refrigeration technology.”

Each Glacier refrigeration plant is factory assembled and only requires simple connection on site, whilst the spiral is delivered in modules for ease of assembly. The spiral unit and refrigeration plant both have a compact design and small footprint. J

Luna and Lara’s Shrink Sleeves Fit For a Prince una and Lara Pure Spring Water has been given a Produced by Eauvolution, the water is available in L design fit for royalty, thanks to shrink sleeves three flavours – Strawberry, Apple and Pure Natural manufacturer Chadwicks. Chadwicks, has created Spring Water. The company is hoping to encourage three fun, eye-catching designs using the brand’s twin characters ‘Prince Tabby’ and ‘Princess Tara’ to appeal to children. The sleeves are printed eightcolour UV Flexo on 50 micron film, providing a vibrant quality look for this exciting new range.

children to drink more water by using eye-catching cartoons that illustrate the health benefits that it can bring. To find out more about Chadwicks visit www.chadwicks-sleeves.com, or call +44 (0)161 763 2100. J

Cargill Innovation Delivers First Chocolate With EU Reduced Calorie Claim argill’s cocoa & chocolate business has C unveiled the breakthrough technology behind the first chocolate to achieve an EUapproved consumer claim of ‘reduced calorie’. The 30% calorie reduction is double that of any other chocolate on the market and is equivalent to a saving of up to 160 calories for a 100g chocolate bar.

The innovation has been achieved through applying Cargill’s chocolate expertise to an innovative process using a patented blend of sweeteners, including Cargill’s zero-calorie bulk sweetener, Zerose erythritol.

Zerose erythritol is the only polyol which

is recognised as zero-calorie, is produced by a fermentation process and does not exhibit the digestive intolerance that can be associated with other polyols. Erythritol occurs naturally in nature in fruits such as grapes, and in fermented foods and drinks, such as wine and soy sauce. It is also recognised as ‘toothfriendly’ by Toothfriendly International, as it does not cause tooth decay.

As an alternative to the reduced calorie claim, the Cargill innovation also offers two further benefits to manufacturers using chocolate as an ingredient: they can reduce the calorie level per portion; or they can use

more chocolate in their product for the same calorie amount.

Expected to be available commercially next year, the innovation demonstrates the pioneering results that are produced from the powerful combination of Cargill’s broad food ingredients knowledge coupled with its deep chocolate expertise. J

FOOD & DRINK BUSINESS EUROPE, NOVEMBER 2010

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I DAIRY

Culture of Growth at Muller Dairy Muller Dairy (UK) is investing heavily to increase production capacity and efficiency at its factory at Market Drayton in Shropshire as the company continues to lead growth in the £2.1 billion British chilled yoghurt and pot desserts market. art of the Unternehmensgruppe Theo Muller, Germany’s largest privately-owned dairy business with operations in many other European countries, Muller Dairy (UK) has been the yoghurt market leader in Great Britain since 1995, with a brands portfolio headed

by Muller Corner.

Muller Group first entered the British market in 1987 and the Market Drayton production site was established with investment of £30 million investment in 1991. A further £24 million was expended on extending the warehouse and distribution facility in 1999. In 2001, the site was again expanded with investment of £55 million, which increased processing capacity to about 230 million litres of raw milk and allowed it to produce around 95% of Muller’s UK needs.

However, for the dairy to supply the UK market completely from Markey Drayton, without relying on imports from Germany, a £20 million investment programme was commenced last year, including £12 million on new machinery that increased the site’s output to two billion pots per year.

“Despite having a state-of-the-art dairy production facility in Market Drayton, growing demand for Muller Corner yogurts was beginning to stretch what we could supply,” explains Gharry Eccles, chief executive of Mullet Dairy (UK).

While there is little scope for further expansion of the existing site, Muller has outline planning permission for further development on an adjacent site of 55 acres, which the company owns.

Muller Dairy (UK) places great emphasis on local sourcing with about 90% of milk supplies coming from farms within a 30 miles radius of the Market Drayton site.

Over 150 local farmers deliver fresh milk twice daily to the dairy. Indeed, many farmers have supplied Muller Dairy (UK) since it commenced yoghurt production in 1992.

Further Market Growth The UK market offers ample scope for further growth by Muller Dairy (UK).

According to the company, even a slight increase in yoghurt consumption at breakfast, as a snack and in lunchboxes could boost annual sales by almost £200 million, more than triple the current growth rate of the £2.1 billion chilled yoghurts and pot desserts market.

The company is currently targeting the 23% of households where it has not made an impact along with the food service market, which it has neglected in the past.

Muller Dairy (UK)’s parent in Germany is a more broadly based dairy business but the British company remains focused on growing within its existing product categories. It will also remain focused on brand development with no intention of entering the retailer own-label market.

P

Leading Brands Muller Dairy (UK)’s leading brand is Muller Corner, which is valued at more than £220 million, followed by Muller Light, worth over £130 million, and Muller Rice at over £50 million. Other brands

Gharry Eccles, chief executive of Mullet Dairy (UK).

within the portfolio include Muller Vitality, a probiotic yogurt launched in 2000 which is performing well within this developing market sector, Muller Amore and Muller Little Stars.

The Muller brands are well established in Great Britain, controlling more than a quarter of the yoghurt market and achieving 77% household penetration. The UK chilled yoghurt and pots desserts market is continuing to grow, with sales rising by £53 million in 2009, driven by Muller, which accounted for £22 million of this increase.

Sustainability Environmental sustainability and corporate social responsibility are key aspects of the company’s development strategy. Muller Dairy (UK) was the first dairy company to join the Carbon Trust as a pilot partner in December 2007. The company has been working with the Carbon Trust to measure the carbon footprint of one of its Muller Corner products in order to understand the main impacts and where improvement could be made. Indeed, enhancements to processes at the Market Drayton site to improve efficiency and reduce environmental impact have resulted in energy use being cut by 7.5 million kWh. Muller Dairy (UK) has also signed up to the Courtauld Commitment to reduce packaging waste. It has already reduced the thickness of some of its pots and reduced the amount of cardboard used. For instance Muller Vitality Drinks now have 15% less packaging and are 100% recyclable. The UK’s leading yoghurt produces has committed to using 3,000 tonnes less packaging by the end of 2010 against 2006 and to having 95% of its packaging made from recyclable and/or recycled materials by 2015.

Furthermore, it has set a target: reduce waste to landfill by 66% (2,000 tonnes) between 2007-2011 and to zero by 2015.

FOOD & DRINK BUSINESS EUROPE, NOVEMBER 2010

13

Muller Dairy (UK) is also working closely with its farmer suppliers to improve the supply chain while simultaneously reducing its environmental impact. It has also been hosting school visits to farms to increase children's understanding of food production.

Theo Muller Group With annual sales of over Eur2 billion and employing more than 4,500 people, Muller Group is one of Europe’s top ten dairy processors. The business dates back to 1896 when it was a Bavarian village dairy.

However, rapid national and international expansion has only been achieved since 1970, when Theo Muller, grandson of the founder, took control of the family business.

A major watershed in the development of the business was the launch in 1980 of an innovative snack with fruit sauce and dairy rice in the same container -

N E E W W S S N Satisfactory Interim Performance by Milk Link Milk Link, the UK dairy cooperative, has more than trebled profit before tax to £12.2m in the first half of 2010, compared to the corresponding period in the previous year, and increased EBITDA from £12.5m to £21.3m.

Group turnover was £283m, up from £259m in the first half of 2009.

The 2010 first half financial performance reflected the benefit from a full six months of contribution from Llandyrnog Creamery acquired in June 2009 and at the same time not having to manage the impact of a reverse in stock profits as was the case in the first half of 2009.

“The business performance was achieved against the backdrop of a highly challenging trading environment, as the weakness of the economy and fragility in consumer confidence had an inevitable impact on our core retail and food service markets. In particular, we continued to witness intense competition for market share and unprecedented levels of deep cut promotional activity, particularly on branded Cheddar, which resulted in an erosion of overall returns from the market,” explains Neil Kennedy, chief executive of Milk Link. “From a Milk Link

the forerunner of Muller Rice. This innovative combination of convenience and taste proved very popular and during the 1980s Muller introduced its now famous twin-pot with yogurt and fruit, which was the concept behind Muller Corner.

Following its successful entry into the English yoghurt market, Muller Group has expanded throughout Europe, tailoring its products to suit local tastes. In 2008, the enterprising dairy group made its first move beyond Europe by launching products in Israel.

In addition to its dairy processing operations, Muller Group also incorporates its own logistics business, Culina, and a packaging company, Optipack, as well as Muller Naturfarm, one of the largest fruit processing companies in Germany.

Heavy Reinvestment Muller Group reinvests heavily in its busi-

B R R II E E F F B

perspective this was partially offset by our being able to take advantage of unseasonably strong dairy commodity prices, increased levels of milk production from our members and ‘direct’ suppliers and the leveraging of a series of cost saving and efficiency initiatives.”

Milk Link has completed its refinancing and the new competitive, longer term and more flexible facility provides the group with the necessary funding for its ongoing business operations, capital investment programmes and growth strategy.

“Looking forward to the second half of the year the overall economic and trading conditions are likely to remain challenging,” he says. However, Milk Link expects full year profits for 2010/11 to be in line with its budget and ahead of last year.

Neil Kennedy, chief executive of Milk Link.

– –

ness to retain a competitive and technological edge. The main factory at Leppersdorf in Saxony is one of Europe’s most modern dairies. It represents the group’s largest ever investment project with more than Eur400 million having been committed since 2009.

Muller also invested an additional Eur22 million in the construction of a bio-ethanol facility at the Leppersdorf site in 2007. The first of its kind worldwide, the facility converts molasses, a residual product of whey, into an annual 10 million litres of environmentally friendly fuel additive.

In addition to its current capital investment programme to develop its yogurt and chilled desserts business in the UK, the privately owned German dairy group recently increased its stake in British dairy group Dairy Crest to 3.04%. The move has sparked speculation that Dairy Crest may become a bid target. Dairy Crest would carry a price tag of about £1 billion, according to analysts. J

D A A II R R Y Y D

Arla Foods UK to Expand Cravendale Milk Capacity Arla Foods UK, the British arm of Scandinavian dairy co-operative Arla Foods, is investing £6.7m in a new bottle blowmoulding machine to increase production of its Cravendale milk brand at its production facility at Stourton in Leeds.

When operational in March 2011, the new blowmoulder, which will supplement two existing machines, will expand milk production capacity by about 50m litres.

“Cravendale has doubled in value in the last four years.

Since its launch 12 years ago we have recently topped the 200 million litre milestone and expect value sales to exceed £166 m by the end of the year,” says Sam Dolan, Cravendale brand manager. “The expan-

FOOD & DRINK BUSINESS EUROPE, NOVEMBER 2010

sion of the blowmoulding facility at Stourton and subsequent increase in production capacity supports our ambitious growth targets for Cravendale, where we plan to be a top 10 grocery brand by 2020.”

Emmi Completes Extension of Cheese Ageing Cave Swiss dairy company Emmi has completed the extension of its cheese-ageing cave in Kalthbach in response to growing demand for Kaltbach cheese specialities in Switzerland and abroad.

Over the last two years the facility has been extended by 1,300 metres. Some 1,800 tonnes of Kaltbach cheese were sold in 2009 with 38% on the home market and the balance exported. Demand for Kaltbach specialities has risen continuously in recent years, primarily in the US, the Netherlands, Germany and the UK, but also in Asia, South Africa and Russia.

15

COVER STORY

Adams Foods is New Force in UK Dairy The Kerrygold Company and North Downs Dairy, both wholly owned English subsidiaries of the Irish Dairy Board, have now been merged to create Adams Foods, making it a leading supplier of cheese, butter and other dairy products to the retail and food service sectors in the UK.

T

he factories of both The Kerrygold customers’ needs and drive an aggresCompany, based in Leek, Staffordshire, sive added value growth agenda in the and North Downs Dairy, based in UK market.

Wincanton, Somerset, are being “In a category where private label retained. This allows Adams Foods to harness accounts for over 50% of the market, the respective strengths of the two cheese Adams Foods can offer its customers packing operations to efficiently deliver the unrivalled independent insight of the broadest range of pre-packed hard cheeses to market from both a private label and the UK market. The annual turnover of the branded perspective,” comments Carl combined business is in the region of £335 Ravenhall, managing director of Adams million.

Foods. “As category leader, we will conThe Leek-based Kerrygold Company was tinue to deliver high quality, volume formed in the 1970s following the acquisition and specialist private label cheeses for of local business Adams Butter by the Irish our retail and food service customers, Dairy Board. Adams dates back to the 1920s whilst growing the Kerrygold and when it was established as a dairy selling but- Carl Ravenhall, managing director of Adams Foods.

Pilgrims Choice portfolios. This will be ter and milk. North Downs Dairies was key to Adams Foods becoming the acquired by the Irish Dairy Board in 1997. most enterprising supplier of cheese, butter and other dairy prodAdams Foods has become the UK’s leading supplier of retail pre- ucts in the UK.” packed hard cheese, supplying over 30% of the total market and Following investment of £30 million by the Irish Dairy Board in the leading supplier of private label in the convenience and healthy a new state-of-the-art factory and office complex, which opened in cheese categories. The new company will supply over 200 million 2009, the Leek site is one of the most efficient and environmentally packs of cheese each year. friendly cheese packing facilities throughout the UK and Europe.

Brands Portfolio The Adams Foods cheese portfolio includes branded cheddar in the form of Pilgrims Choice, and added value private label cheeses in other hard cheese sectors including Handmade Farmhouse cheddar and organic cheese. Adams Foods is also continuing to sell and market Kerrygold butter, the premium Irish butter and leading consumer brand in the UK. The Irish Dairy Board expects that by merging the Kerrygold Company and North Downs Dairy businesses it can better serve its

The Leek site is one of the most efficient and environmentally friendly cheese packing facilities throughout the UK and Europe.

Expansion in Dairy Ingredients The Irish Dairy Board has also decided to expand the dairy ingredients side of the Adams Foods operation at Leek in response to growing global demand for its products. Adams Foods Ingredients adds value to milk powders via product differentiation and the formulation of customer specific solutions. After a study of various strategic options for the AFI business, the Irish Dairy Board has approved an investment in a new strategic ingredient formulation facility.

The new facility is scheduled to be completed in mid 2011 and will be designed and built to the highest environmental and efficiency standards. Its technically advanced blending technology will bring new production competencies and flexibility to the AFI range of ingredients and will position AFI as the leading UK player in the formulation of powdered dairy solutions.

“The investment will enable AFI to explore a wider range of products and new technologies,” explains Steven Howarth, managing director of AFI. “Exact plans are confidential, but will see AFI venturing into new areas.”

A new 5,570 sq m plant will replace the existing Adams Foods is also continuing to sell and facility, enhancing process- market Kerrygold butter.

FOOD & DRINK BUSINESS EUROPE, NOVEMBER 2010

17

ing, blending and packaging capabilities. The new factory will also incorporate an applications centre for new product and process development.

Irish Dairy Board Established in 1961 and with a turnover of Eur1.82 billion and a surplus before tax of Eur31.9 million in 2009, the Irish Dairy Board exports Irish dairy products and a wide range of food ingredients to over ninety countries and is a leading international food company.

Headquartered in Dublin, the group is owned by Irish dairy processing co-operatives and dairy companies and, through them, by Irish dairy farmers. The Irish Dairy Board provides scale, scope, logistics and distribution expertise for the global export of Ireland’s dairy products. Its flagship brand is Kerrygold, which was launched in

N E E W W S S N First Milk Returns to the Black UK dairy co-operative First Milk has reported profit before tax of £3.2m for the six months period ended September 30th 2010, recovering from a loss of £9m in the first half of last year.

Similarly, operating profit increased by £11.8m to £3.8m as improvements were achieved across the group’s various businesses, and turnover rose by £24m to £280m. Bank debt was also reduced by £32m during the period, helped by the sale of one third of First Milk’s stake in UK dairy company Robert Wiseman Dairies for £18.5m in November 2009.

“We have laid out a strategy to drive shareholder returns, grow our brands, diversify our product and market mix, lower our cost base and seek value in partnerships,” comments Bill Mustoe, chairman of First Milk.

“Benchmarking these half-year numbers against the prior year shows a greatly improved performance. The results in the first six months of last year were poor, mainly as a result of paying out a milk price that was ahead of market returns, a tactic we no longer pursue.” However, First Milk still managed to 18

Expanding Irish Dairy Output by 50% Would Cost €850 Million The cost of proposals to increase production of Ireland’s dairy industry by 50% over the next decade, to coincide with the ending of EU milk quotas, would cost about Eur850 million, according to Kevin Lane, chief executive of the Irish Dairy Board.

The hike in Irish dairy output, as envisaged under the Government’s recently published Food Harvest 2020 policy document, would require investment of Eur400 million in extra processing capacity to handle the additional 2.7 billion litres of milk, along with almost Eur250 million in working capital, finance and the provision of associated facilities such as storage.

Food Harvest 2020 envisages doubling Irish annual cheese production to more than 300,000t and increasing whole milk powder production four-fold to 100,000t. However, to successfully market this substantial increase in production in overseas markets through brand support and the funding of acquisitions, would require further investment of at least Eur200 million, points out Kevin Lane.

1962, initially in the UK, to increase exports of Irish butter.

Kerrygold has since been developed into a global brand.

The Irish Dairy Board operates three divisions - Consumer Foods, Food Ingredients and DPI, a specialty food distribution company in the US. Group subsidiaries in the UK, mainland Europe and the US pack, distribute and market a wide selection of branded products, dairy ingredients, specialised grocery, delicatessen and gourmet food items of both Irish and non-Irish origin. J

B R R II E E F F B

deliver milk price rises to its farmer members of 2.2 pence per litre during 2010.

He continues: “Looking ahead to the next six months, we are convinced that our strategy continues to be appropriate for the tough market conditions and expect this solid turnaround to be maintained.”

Warsaw IPO For Milkiland Dairy company Milkiland, which operates in the Ukraine and Russia but is registered in the Netherlands, is seeking to raise about $100m via an initial public offering of 20-25% of its equity on the Warsaw Stock Exchange. The funds are expected to be used for acquisitions.

Established to develop dairy processing businesses in Eastern

– –

D A A II R R Y Y D

Europe, Milkiland owns Milkiland-Ukraine, one of the largest dairy companies in the Ukraine with 16 production sites, as well as a 75% stake in Moscow-based Ostankinsky Molochny Combinat, one of the largest dairy enterprises in Russia.

Arla Foods UK to Consolidate Butter Production at Westbury Dairies Arla Foods UK, the British subsidiary of Scandinavian dairy co-operative Arla Foods, is to manufacture retail packet butter at Westbury Dairies, from August 2011. The move follows the announcement in September that Arla Foods UK was to become a shareholder with UK dairy co-operatives First Milk and Milk Link in Westbury Dairies.

All three parties have been examining ways in which the potential of the Westbury site can be developed and the board has agreed that Arla Foods will operate the existing butter-making facility at the site. Arla will also build a dedicated butter making and packing facility for retail products, in addition to continuing production of bulk

FOOD & DRINK BUSINESS EUROPE, NOVEMBER 2010

butter. About 60 jobs will be created at Westbury Dairies as part of the initiative.

Historically, Arla’s retail own label butter has been produced at Settle, in North Yorkshire, as well as Gotene in Sweden and Varde in Denmark. The move to produce butter at Westbury consolidates Arla’s UK own label butter requirements into one site, and significantly reduces food miles and transport costs.

Westbury complements the business’s other major butter production facility at Holstebro in Denmark and, potentially, will result in the closure of production lines at Settle and Götene and the closure of the Varde site.

Peter Lauritzen, chief executive of Arla Foods UK.

I FOOD INGREDIENTS

JR Boone - The Process Plant and Mixer Specialist ased at Congleton in Cheshire, JR B Boone specialises in the design and supply of process plant and industrial mixing equipment. The company has extensive expertise and experience of meeting the specific needs of food processors and has been a supplier to Adams Foods for over twenty years.

For example, JR Boone provided Adams with one of the first ATEX rated mixers (a Horizontal Helical Blade Mixer) following the introduction of the new regulations across Europe, having been asked to design a machine capable of increasing batch size, reducing maintenance costs and improving productivity but with the same footprint as the machine

being replaced.

More recently Adams conducted extensive tests on JR Boone’s range of horizontal Mixers and following detailed discussions with the production and engineering teams Adams selected the Horizontal Helical Blade Mixer as the optimum machine for the new dairy food ingredients plant at Leek. This will provide the flexibility to be able to produce a broad variety of products while ensuring ease of cleaning, reliable production and minimum maintenance.

Established in 1861, JR Boone mixers and mixing systems are now used worldwide in the production of powders, granules, pastes and liquids, and are well

respected for their reliability, versatility and economy of operation.

“We work very closely with each client to ensure that they receive exactly the machine that matches their precise requirements,” says Chris Boone, managing director of JR Boone. “We also offer full test facilities for all of our machines. We guarantee that the final production machine will match the performance achieved at pilot or test level.”

For further information contact JR Boone on Tel +44 (0)1260 272894 or visit www.jrboone.com. J

FOOD & DRINK BUSINESS EUROPE, NOVEMBER 2010

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I COMPETITIVENESS

Food Operators Welcome Moves to Create an EU Industrial Policy IAA (the Confederation of the food C and drink industries of the EU) has welcomed the publication of the European

the EU executive arm’s socio-economic and political ambitions. As an important pillar of the EU economy, the food and drink industry welcomes plans to strengthen the functioning of the EU Internal Market - a key priority for food operators across the Union.

Boasting an annual turnover of approximately Eur965b, food production is the largest manufacturing business in Europe today. The industry generates over 4.4 million jobs directly and is renowned as the largest food and drink importer and exporter across the globe.

Accounting for over 310,000 companies, the industry is also highly fragmented – over 99% of operators are SMEs (employing up to 250 staff). In light of today’s political reality, the development of an Industrial Policy which provides for a more integrated approach to policymaking across the EU, could help reduce the administrative burden on manufacturers and pre-empt policies on matters which affect how operators do business.

“The objectives, approaches and actions outlined in the Report on the Recommendations of the EU High Level Group on the competitiveness of the agrifood industry are a crucial starting point for the development of an EU Industrial Policy

Commission’s ‘Communication for An Integrated Industrial Policy for the Globalisation Era – Putting Competitiveness And Sustainability Centre Stage’.

The document presented under the guidance of DG Enterprise, aims to put industrial competitiveness ‘front and centre’ of

Boasting an annual turnover of approximately Eur965b, food production is the largest manufacturing business in Europe today.

Jesus Serafín Perez, president of the CIAA.

for Europe’s food and drink sector,” comments Jesus Serafín Perez, president of the CIAA. “Given the recent creation of the High Level Forum on the better functioning of the food chain, we are delighted to see that the latter will act as the mechanism to take forward the competitiveness goals for our industry, and, we look forward to playing an active and positive role in this new structure.” J

I MARKET FOCUS

The Future of the $7 Billion International Weight Management Market he international weight management felt quickly, if not immediately. Indeed, T market was worth an estimated $7.3b in Leatherhead Food Research identifies two key 2009, and it is set to grow year-on-year at challenges facing the weight management between 6-8% for the next 5 years, according to Leatherhead Food Research.

Weight management has been reincarnated in various forms throughout the food and drink industry over the years. The direction of the industry is shifting from ‘better for you’ products (ie diet and low and light foods) towards functional weight management products providing consumers with differentiation and added value, as well as fuelling innovation and growth within this market.

General trends identify that a successful weight management product has to be both convenient and offer a benefit which can be

industry in the near future - providing consumers with a clear benefit and message, and achieving taste and texture for the mass market.

A large array of products and ingredients ensures that manufacturers need to be clear about what their product delivers. Any benefit needs to be quickly felt or seen, otherwise consumers will become sceptical.

The final product needs to not only deliver a clear benefit, but also to taste and feel satisfying, therefore encouraging repeat purchasing behaviour.

Growth so far has largely been due to innovations within the bakery and cereals and the

beverage markets (which currently hold shares of 33.5% and 28.4% respectively). Beverages and cereals (including cereal bars) remain the most prolific sectors for weight management claims across the globe. This is largely due to the functionality of the products (ie their ability to ‘carry’ other ingredients well), as well as the fact that they are generally perceived by consumers as both convenient and healthy.

The ‘Future of the Weight Management Market’ report is available from the Publications Department at Leatherhead Food Research, priced at £585, with a discounted price of £450 available to Members of Leatherhead. J

FOOD & DRINK BUSINESS EUROPE, NOVEMBER 2010

21

I PROJECT MANAGEMENT

Lindum – The Specialist in Food Industry Construction Projects indum has been delivering construction projects to food industry clients for over 30 years. Specialist food teams take lessons L from previous projects and use them to improve performance for the next. “We are only as good as our last project,” says Simon Gregory, managing director of Lindum Construction, “and since we have had a constant presence in food factory construction for the past 31 years, we hope we are doing something right!”

When challenged on what this ‘something’ is, he says, “we are flexible and proactive and understand that each project is unique and each client is unique.”

The first job on any project is to get to grips with the client’s requirements, and use the team’s experience to develop project solutions which deliver and hopefully exceed expectations.

Recently this has meant developing a new change control procedure for a large Design & Build Project in Penrith and implementing a co-ordinated approach to Health & Safety management on a fast-track project on a ‘live’ site in Kent - resulting in the client saying: “Not only did Lindum achieve a better safety record than the national construction average, they achieved a record equal to our own in house standard.” On this project over 900 operatives were inducted with anything up to 200 people working on site at any one time.

Working on live food manufacturing sites is very familiar to Lindum, but this does not mean complacency. With a detailed understanding of the client’s production operations, the Lindum team plans the work and access arrangements to minimise any disruption. J Au gu st/S

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I BAKERY

The Continuing Rise of Greggs Greggs, the UK’s largest retail baker serving six million customers a week, is defying the economic recession and continuing its expansion strategy.

D

espite the increasingly challenging trading environment, Greggs is making good progress towards its goal of opening more than 600 new shops during the next few years to increase its number of retail outlets to over 2,000.

According to Greggs, this can be achieved without cannibalising sales at its existing shops as more than 50% of the UK does not have access to a Greggs outlet. Bringing Greggs to more consumers will involve the creation of about 6,000 new jobs. The group currently employs 19,000 people.

At the same time as pursuing its expansion strategy, Greggs has also managed to deliver sales growth so far in its current financial, building on a resilient first half when it increased turnover by 2.9% to £321 million and like-for-like sales by 0.7%. Greggs has continued to increase sales in the second half – sales in its third quarter advanced by 2.1%, including a likefor-like increase of 0.2%. The bakery group expects to achieve marginally positive likefor-like sales growth over the full 2010 financial year.

Indeed, Greggs has proved particularly adept at adjusting its product range to meet changing consumer requirements, especially in the current economic climate. “We are committed to helping our customers make their budgets stretch as far as possible and the exceptional value we offer, combined with the freshness, quality and taste of our products, is a key strength,” points out Ken McMeikan, chief executive of Greggs.

For instance, breakfast sales have been particularly robust, with the bacon roll now the company’s best-selling sandwich line.

Greggs has been steadily extending its breakfast offering with the introduction of croissants, pain au chocolat and porridge.

Streamlining Greggs used its 2009 financial year to centralise and streamline the business in preparation for accelerated future growth, commencing in 2010. Simplifying the business and reducing costs has entailed creating a

single retail bakery brand by converting the group’s 164 Bakers Oven shops to the Greggs fascia in order to benefit fully from national marketing and advertising campaigns and to maximise economies of scale.

Greggs retail outlets are currently supported by a supply chain based on a network of regional bakeries that provide fresh products and distribution services around the country. A national savoury manufacturing facility and two national distribution centres are also used to supply the retail outlets. Greggs produces about 90% of the food sold in its shops.

Developing the Supply Chain To prepare for the addition of 600 new shops to its retail business, Greggs is expanding and refining its supply chain to achieve the optimal production and distribution network to facilitate the expansion.

The development of the supply chain, which requires increased capital expenditure, is expected to deliver annual efficiencies of at least £10 million per annum by 2014. The plans entail replacing two bakeries, expanding three existing sites and constructing a new bakery.

Expansion Plans on Track Greggs’ bakery and retail expansion programme remains firmly on track, with a net of over 30 new shops opened so far this year, giving it a total of 1,451 shops at 2nd October 2010. The group expects total net new shops for the year as a whole to be at the upper end of its previously indicated range of 50-60 outlets.

Construction of Greggs’ replacement

bakery in Newcastle upon Tyne is progressing well, and is scheduled to begin production in mid-2011.

Greggs has received planning permission for a new cake and confectionery bakery in Penrith and has commenced building to be ready for opening in summer 2011.

The UK’s largest retail baker has also submitted a planning application for a new bakery in Wiltshire to enable it to unlock the significant growth opportunities in the South and South West of England.

Outlook “As we expected, the trading environment has been tough and is likely to remain so, with consumer spending continuing to be constrained and inflationary pressures building for next year. We anticipate that like-forlike sales in the final quarter will be broadly flat and therefore marginally positive over the year as a whole,” comments Ken McMeikan. “We continue to keep a very tight focus on costs and our financial position remains strong. Overall business performance in the year continues to be in line with our expectations and we believe that Greggs remains on track to deliver another year of progress in 2010.” J

Ken McMeikan, chief executive of Greggs.

FOOD & DRINK BUSINESS EUROPE, NOVEMBER 2010

23

I CASE STUDIES

DS Smith Packaging - Designing to Save Cash and Carbon s a long-time customer of DS Smith A Packaging Featherstone, Ardagh Glass, one of Europe’s largest glass packaging

R-Flute® has excellent resistance to crushing caused by bottles or cans and this helps with the ‘sweeping’ nature of the packing process, making it much more effective and reducing line downtime. The crush resistance of R-Flute® brought the annual packaging weight down by 160 tonnes.

This translates into a reduction of 142 tonnes of CO2 emissions. 1700 pallets have been taken out of the supply chain and 68 fewer trucks are needed for deliveries.

What’s more, valuable warehouse space was freed up, saving money and creating space for new sales opportunities. J

manufacturers, relies on the team at Featherstone to interpret their needs and review any new technology that might bring benefits to their packaging supply chain. That is exactly what happened when Featherstone recognised the impact RFlute® could have on this customer’s packaging line.

The previously used B-flute hampered the packaging process as the weight of the bottle made an indentation on the board.

DS Smith Packaging Turns Up the Volume for Constellation S Smith Packaging South West was D delighted when called on by Constellation Europe to develop a new range of wine packs.

The team recognised that a significant new breakthrough in fluting technology, R-Flute®

could bring considerable benefits to its customer.

Constellation Europe is the largest premium drinks company in Europe boasting a highspeed, state-of-the-art bottling plant at Avonmouth. The site, which can fill an estimated 800 bottles of wine per minute and store a massive 57 million bottles, is highly streamlined to capture efficiencies in both cost and environmental impacts.

The first step was to utilise DS Smith’s PackRight tool kit, which allowed the team to take a systematic approach to understanding Constellation’s supply chain, and enables DS Smith to develop packaging that delivers optimum performance in both strength and print.

R Flute® when compared with B flute, delivers supply chain optimisation characteristics and supports Constellation Europe’s com-

mitment to reducing its impact on the environment. For example with R-Flute® 35% more product could be put onto a pallet inbound. This coupled with improved print quality and presentation creates a vast point of difference for brands that really want to turn up the volume in store. J

Saucy Sales and Savings hen launching its award winning W innovative bake-in-bag product, The Saucy Fish Company turned to DS Smith Packaging Louth for its retail ready pack.

The team at Louth specified a great new development in fluting technology - RFlute®. This medium provides a superior performance in both print and pack construction and this helped to develop a retail ready pack that perfectly complements the shaped inner cartons, holding them securely and in a way that presents the full face of the primary pack to the consumer.

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The closeness and structure of the flute tips, when compared to B flute, enables the pack to fold very accurately, so that the finished pack is always neat and square. The perforated opening works reliably and gives a neat appearance on the shelf. This allows more of the primary product to be visible to the shopper, greatly increasing point of sale impact.

As the calliper of R-Flute® is 20% less than B flute’s there is so much more packaging being delivered on every pallet with the result that there are 20% fewer vehicles on the road. J

FOOD & DRINK BUSINESS EUROPE, NOVEMBER 2010