Joe Heron, managing director,
Crocus Total Project Solutions
THE Traditional Cheese Company was founded on the basis of bringing something new to the market. It has grown from being a distributor of “obscure” products to being a leading supplier in a growing sector. The firm faces a difficulty in trying to remain
a distributor of a huge range of products, while maintaining a competitive cost base.
Although partnering Superquinn probably offers more freedom than partnering other multiples, being so heavily dependent on one client is not always a healthy situation. The company needs to explore new opportunities for development.
The Northern Ireland market is still underestimated by southern businesses. The firm is by no means alone in exporting to companies outside the European Union while ignoring a market on its doorstep. InterTrade Ireland and statutory support agencies in the food sector are generally very supportive of companies looking to invest in expansion into the Northern Irish market.
Online service can fuel expansion
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Ian Mernagh, senior business manager, Bank of Ireland
EUGENE CARR knows the value of staying focused on growing the business he knows inside out. However, he may be unduly cautious about not spreading his wings in markets overseas.
Opening up new geographic markets requires significant investment and can be a distraction if not handled properly. He has a strong management team and has sufficient scale to contemplate selective market entry in the high-value prestige end of the business, however.
Ireland’s smaller producers need highly skilled marketeers such as Carr to help open doors of opportunity. This is a good time for him to consolidate his relationship with producers and
to help build the reputations of everyone involved. There could be merit in establishing a sister company to concentrate solely on this aspect.
E-commerce is another area where there is potential for the firm to attract more customers and increase efficiencies.
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Bagel idea looks a tasty opportunity
Willie Maxwell, programme director, InterTradeIreland Acumen programme
THE company is a highly effective distributor. A 28% growth target this year following on from 24% last year is impressive. There appears to be a good management team and it makes sense that the key players hold a stake in the business. The bagel fillings opportunity is definitely one to be pursued.
Northern Ireland is on the doorstep and this represents the next logical market to tackle. The key Irish multiples are well bedded in in that market already. The company has the advantage of having existing supply relationships with the key retailers and working relationships with their buyers.
Good wholesalers and distributors are always under pressure to carry more lines and this has stock and finance implications. There will be products nearing the end of their life cycle and there will be new entrants that require nurturing. Getting this balance right and yet satisfying customer and market demand separates excellent distributors from less valuable distributors.
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Britain offers growth potential
Ed McDonald, chief executive, the Marketing Institute
THE food sector is notoriously competitive. The sophistication and trends in consumer tastes points to a high number of niche products, which are changing all the time.
Three points warrant close attention by the company. Relationships with the main retailers are critical to its success and future growth. Roches Stores is now out of food retailing, but Tesco is expanding rapidly as are other operators. Being close to the buyers in the leading multiples is essential if the business is to enjoy continuing success.
With 600 product lines, it is surprising that the company sees itself as having only two main rivals. Inevitably, some of those it considers “non-main” competitors will grow and become more competitive — and that will put increasing pressure on the business if all operate to tight 3% margins.
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It is time to expand its markets and look to the potential of the British market, where a strategic approach with leading multiples could pay dividends in the long term.
Weed out the loss-making products
Mark Fielding, chief executive, Isme
CARR’S company already stocks more than 600 short-shelf-life products and new ones are coming on stream all the time. Added to this is the raft of rules and regulations related to these diverse products, which can put additional strain on an already stretched management team.
Because of the tight margins of about 3%, it is probable that within the extensive range of products lurks several loss makers, unnoticed and disguised in the overall accounts of the business.
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It is not uncommon to discover a disproportionate amount of cost and effort are sometimes invested to achieve a small amount of sales profit.
Each product should now be examined in terms of costs attributable to it and the net margin produced, also taking into account the complementary combinations of the products.
What-if scenarios should be modelled to estimate the effects of dropping some low-profit items or reducing price on others to increase volume and profit.
Profit from moving up the value chain
Louis O’Neill, director, BDO Simpson Xavier
THE managers have built a strong distribution business with several key assets — a national sales team with access to a large number of retail and trade accounts, and a detailed knowledge of retailers’ and consumers’ future product requirements. The future of the business is in maximising these assets.
As a distribution business, growing turnover has been the priority. However, managers should consider moving up the margin chain and maximising the profit it can generate from key assets. Using its knowledge of consumer demand, the company has the ability to create new products that will appeal to retailers instantly. These products will be largely focused on cheese, but could include a mix of other ingredients.
By joining with other ingredient providers to provide cheese-based convenience meals, snacks, mixed toppings and other value-added products, the business will begin to move away from being a low-margin distributor to a value-added food supplier.