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The Interview - Peter Hunt's - going for a bigger piece of the bakery products market

Peter Hunt's Bakery Foods is one of Britain's major producers of savoury bakery products, supplying both the retail and foodservice sectors, including its own high street bakery outlets. One of the founding companies of Lyndale Foods Ltd in 1996, today the company operates from a purpose-built bakery in Kearsley, Bolton, with the capacity to produce over 2,500,000 units a week. Steady growth has seen Peter Hunt’s become a company with an annual turnover in excess of £25m. The company’s latest investment in pastry mixing, puff pastry lamination, product make up, decoration, freezing and packing, will see capacity increase to over 4,500,000 units a week. Peter Hunt's Bakery Foods' Sales Director Gerald Forbes spoke to The Grocery Trader. The Grocery Trader - To set the scene, how is the UK savoury bakery market performing? What are the growth areas? The savoury bakery market covers three areas, chilled, frozen and bake-off. Peter Hunt's are in two, frozen and bake-off. Frozen - in the freezer well in the multiple grocers - is in longterm decline, losing 8% PA, but the bake-off market is growing. Bake-off is difficult to measure, as it covers so many different areas, but AC Nielsen reports it growing 6% PA, hence our recent £3.5m investment in our Rademaker plant. GT - When was the Peter Hunt's business founded, and by whom? Peter Hunt's was founded in 1908, by a gentleman of that name. Ironically we only found out about him last year when one of his relatives came to the bakery with information, including a photo of Mr Hunt in his house in Bolton, baking off products. We’ll be celebrating the centenary in 2008. Peter Hunt's became part of Warburton's in the mid 1970s, and in 1996 was sold to Lyndale in a management buy-in. Warburton wanted to sell off their non-core businesses, but still retain a 20% share. GT - How long has the present Peter Hunt's management team been in place? I'm probably the longest serving member, having been here nine years. David Love, the production director, has been here three years and the MD, Grant Inkpin, 18 months. I’ve been in the food industry for 20 years. I was at MD Foods, the Danish co-op that owns Lurpak, and before that Associated Dairies and Cravendale, which became MD Foods. GT - What kinds of savoury bakery products do you make? Our savoury range includes traditional pies - handheld and family pies, and a range of handheld slices and sausage rolls. GT - How many different products do you make in total? Which products do you sell most of? We have 120 savoury products altogether. The best selling ones are our own label sausage rolls, and then our own label steak slice. GT - Have you brought out any new retail products recently? What are they, and who are they aimed at? We've just introduced the Kearsley's brand, aimed at the discount frozen food retailers. Stocks are going into customers this autumn. Kearsley's is a tertiary brand, aimed at particular price points. The initial products are three 680g family pies - Mince Beef & Onion, Vegetable, and Chicken & Mushroom; two 454g pies, Chicken & Vegetable, and Meat and Potato; and Steak & Kidney Pudding 170g 4 pack. GT - Do you make any sweet pastry products? We're bringing out a range of lattice bars, similar to those sold in burger chains. They're due to be launched in January/February, and we’ve already got nationwide listings. Our pies and other products are mainly savoury, but we’re also looking to develop a range of sweet pastry-based pies, for launch early next year. GT - Who leads your product development, and where is it done? Our NPD is all done on site in Bolton in a special test kitchen, and this part of the company is currently being restructured. We have a newly appointed product manager joining on 27 November, who will be supported by a team of NPD technologists. Our business is growing, focusing on strong NPD, hence the appointment of a product manager to lead it. GT - How big is Peter Hunt's in terms of overall turnover and staff numbers? How fast are you growing? What's driving the growth? Turnover for the year starting 2 October is £27m, and we currently have 300 staff. Last year we turned over £25m, hence 8% growth, mainly from food to go and handheld savoury pastry. GT - Where are your UK manufacturing locations? How much money have you invested in your current expansion programme? We've just the one site, Kearsley, Bolton, since Lyndale took over in 1996. There's been a major ongoing investment programme of nearly £10m since then, with £3.5m in this latest phase. GT - What will this investment mean in terms of improved or additional production and other facilities, and at which locations? Production on the Rademaker line was at full capacity, and to continue to grow we needed to invest in a second Rademaker plant. In order to accommodate the new line we exited chilled, which gave us more room, and the bakery was turned over to frozen production. We now produce off the line straight into spiral freezers, which is more cost effective for the high volume plant. The new development is our second major investment in six years, and confirms Peter Hunt as the largest high tech savoury bakery plant in the UK. The £3.5m investment provides a fully integrated manufacturing line for pastry mixing, product manufacture and final packing. GT - What increases in production capacity will this expansion programme give you? It means our sterling turnover can rise to £35m on this site, from the current £27m, so this facility will be good for three to four years. GT - When did the expanded facilities go live? What do they mean for your customers? The new line went live in late August. It means we can take on more customers. On the back of the new investment we’ve already secured business from the UK’s largest supermarket chain. We launched four new products with them in August, and have contracts for four more in February. GT - Was your production affected during the expansion? No, not at all - the work was completed between mid-February and mid-August, all down to our production director David Love. He project managed the whole concept in time, on budget. GT - What other benefits will there be as a result of this expansion for your trade customers - will you be able to offer them other choices and combinations of products? Yes, we can now offer a much wider choice of shapes, designs and fillings. One of the main new areas of opportunity is our new sweet and savoury lattice products. GT - What proportion of your sales goes through your own retail bakery outlets? What are these outlets called? Some 25% of our turnover goes through our 220 retail bakery outlets, Hampsons in Manchester and Bolton, and Sayers, predominantly in Liverpool. GT - Focusing on the supermarkets, Co-ops and convenience store chains, what products do you supply to them? We mainly supply the multiples with bake-off items: own label products for in store bakeries and pie shop concepts. We also supply a lot of convenience stores and other bake off suppliers. GT - What are your biggest selling products in these multiple retail outlets? The biggest sellers there are sausage rolls and steak slice, as with our overall business. GT - In what form are your products supplied to retailers? They're mainly supplied frozen, unbaked. GT - Do you work with the supermarkets to prepare your products for sale and maximise sales of your products in those outlets? We have a customer service team who work with the major multiples - Asda, Morrison, Tesco - who produce baked off goods in store. We're on site to offer advice, cover new store openings and train staff. The team was established two years ago, and covers the whole UK. GT - As a supplier, how do you sum up your proposition to the multiple retailers? We offer the multiples a full offering in own label. We have products available at different points of sale in store - frozen and baked-off in the in-store bakery, frozen and baked off in the in-store café and also in the freezer well. At least one supermarket sells our products in all three channels. GT - Do you handle your own supply chain to the supermarkets? It's all distributed through Yearsleys. GT - Do you also supply foodservice customers? Yes - foodservice is another 25% of our business, and covers the pub trade, with sausage rolls, pies and suet puddings. We also supply cafes and c-stores selling hot snacks. GT - How important is the 'food to go' sector to your business, and what's your involvement with it? It's a major growth opportunity, and there's a lot of growth to be had there with new products, both sweet and savoury. We're in a lot of petrol forecourts, motorway service stations, rail, airports and convenience stores, and we see this area building further. GT - Have the recent concerns about health and obesity affected your sales at all, and how have you responded? We haven't seen our sales dropping in recent months, although we've moved our flavour and recipe profiles, especially in our new lattice products, to give a lighter eat. The pies' and puddings' recipes will remain as they are - people see them as comfort and indulgence, for the occasional treat. GT - Is there a Peter Hunt's consumer website? What's on it? It's being updated now to reflect the growth in the company and our increased capabilities. It will also feature a news section and a more comprehensive guide to key contacts for customers and suppliers. GT - What recognised quality standards are you accredited to? The Kearsley factory is accredited to BRC Global standard and is approved by all the major multiples. GT - Have you won any quality awards? We've not been thinking about such things recently, to be honest, as we've spent the last few months bringing the business up to the level we want it to be, but we'll be entering various awards next year. GT - What do you see as the most important external factors and trends that are likely to impact on your business? The key factors are the continuing growth in eating on the hoof and food to go. There's still plenty of mileage left before the market levels off. GT - Finally, where do you see the Peter Hunt's business going from here? We see Peter Hunt's developing steadily. Given our quality products and facilities, the consistency we can deliver from our new high volume plant is the same day in, day out, and this will continue growing over the next three to four years. Staying on this site, we could grow to £40 million at today's prices in the next five years. Peter Hunt's Bakery Foods Ltd Tel: 01204 793 446 www.peterhunts.co.uk