Own-label floats RGF's boat as 'designer' group expands

By Elaine Watson

- Last updated on GMT

Related tags: Real good food, Food, Napier brown

Own-label floats RGF's boat as 'designer' group expands
Ambitious group takes decentralised approach to own-label

Real Good Food has signalled its ambition to join UK food processing's premier league by building a £1bn own-label business over the next decade.

Chairman Pieter Totté said that the recent £67.7m takeover of Napier Brown had finally put the company "on to the radar screens of major institutional investors"

Real Good Food, which floated on the Alternative Investment Market in late 2003, has three divisions: Five Star Fish in Grimsby; Haydens Bakeries in Devizes; and the Napier Brown sugar and ingredients business, which has plants in Liverpool, Runcorn, Normanton, Carluke and Ledbury. Their combined turnover is over £300m, said Totté, who has advised Glisten, Finsbury Food Group and Inter Link Foods in recent years.

He said: "I think there is a real opportunity to build up a food group by design rather than by default, supplying manufacturing, retail and foodservice customers, and focusing on niche, high- margin areas."

This would comprise profit centres led by small teams of md, commercial director, finance director and operations director, he said. "Centralising everything is not always the most cost-effective way to do things. That murders a business because people are too distanced from their plants."

Ideally, he said, each profit centre would turn over at least £50m. "With bolt-on acquisitions at Five Star and Haydens, we could even be looking at £100m each."

However, he saw plenty of opportunities for organic growth and planned to branch out into retailing at Five Star and into foodservice at Haydens. "The Devizes plant could do £25m plus [compared with £16m now], while Five Star is only operating at about 55% capacity."

He insisted that own-label production made sense. "You either buy the supermarkets' shelf space or you sail in the same boat as they do. Own-label means that you can focus on product development and let them spend on marketing. The important thing is to spread your bets across several customers."

Production at the company's Seriously Scrumptious speciality cakes plant in Glastonbury has just been transferred to Haydens, while its loss-making Coolfresh sandwich factory in Rayleigh has closed.

Totté said: "Coolfresh had good prospects, but it needed investment and energy. We were actually close to doing a deal to give it some critical mass in late spring when the Napier Brown opportunity came up and we felt that we had to concentrate on that."