The whole story

Alex Smith, md, Alara Wholefoods​

When I left school, I wanted to be an architect. So, after spending a year deep sea fishing in the Pacific to earn some money, I went to University College London to study architecture.

But before long, I got really involved with the squatting movement, and I started to feel that I was wasting my time studying architecture, when all these properties in London were just lying empty. After a while, I stopped going to university altogether and became a full-time squatter in Tolmers square. I also resolved to see if I could spend a year without money. It was hard in some ways but, in other respects, I look back at that time as being a very easy and carefree period in my life.

I fed myself by scavenging discarded food from New Covent Garden Market, a dairy distribution centre and a wholesaler called Community Foods and kept warm by burning wood from builders' skips. I drank water from the roof and washed in a wood-fired sauna bath.

Alara started serendipitously. I was walking in the square one day in 1975 and found two one-pound notes in the gutter, which I used to pay the fee to enter New Covent Garden Market in a friend's van to collect discarded fruit and vegetables. I sold them and, over time, I slowly built up a business as a retailer and a wholesaler. Gradually, producing muesli became the focus of the business, so we started making it in bulk in industrial premises behind Kings Cross, where we are to this day.

Now, we make about 6080t of muesli a week and employ 50 staff. The customer base is quite varied, from major multiples such as Tesco, the Co-op Group, Waitrose, Morrisons and Holland & Barrett, to caterers, wholesalers, export markets from Ireland to Japan and other manufacturers on a contract basis. We can supply everything from 40g sachets for foodservice to 25kg bulk sacks under the Alara brand or other people's brands.

We are not especially automated, but that's deliberate. We have more than 200 stock keeping units and potentially scores of changeovers every day, which requires speed and flexibility, so that does dictate the way we operate in some areas. For example, we use linear weighers rather than multi-head weighers, primarily because they are quicker to clean and we have so many changeovers.

We are experts at producing that 'long tail' of products efficiently, and reducing waste that has been incurred during changeovers has been key to that making sure that packaging parameters are correct as we set machines up and that they don't start too fast and bags are not sealed correctly. We're losing about 1.5% of product from waste now, but we are challenging it all the time. Most of our wastage comes from giveaway from over-weighing, so we are also concentrating hard on that issue.

While mixing and packing muesli might sound simple compared to some other manufacturing operations, it is actually quite complex operationally because of the number of ingredients we are handling and the complexity and scale of our range.

We have more than 100 suppliers, 140 ingredients and 230 product lines including gluten-free ones, which we produce at the beginning of the week after a wet clean-down. We also manufacture to order, so we have to be as lean as you can be. We had a consultant that visited us to see how we could operate more efficiently, and he left saying it was actually very difficult for us to get any leaner!

The only way to run an operation like this is to have complete visibility, which we have achieved by using a bespoke IT system that enables you to see packaging costs, ingredient costs, labour costs and profit margins on every order, every day. I can also see exactly what we have in stock, all of our ingredient specifications, supplier contracts, delivery inspections and so on.

That's not to say that nothing ever goes wrong. When you are dealing with ingredients that are sourced from all over the world, there are always things that can keep you awake at night, from stones or infestations with raw materials to shipping problems. Recently, for instance, a container carrying raw cacao nibs a key ingredient in a porridge we were supplying to a customer running a large promotion was delayed in transit from Chile and we couldn't find an alternative source. This was very hard because I hate letting customers down.

The weakness of the pound has made some raw materials more expensive, although it has also helped on the export front, but we have seen real volatility in some ingredients prices lately. Vine fruits have gone absolutely mad; organic sultanas have gone from around£1,050/t to £2,000/t in the last few months. Hazelnuts have gone up by £1,000/t and goji berries have also moved up quite a lot. We don't have much scope to pass these costs on, so we've had to take the hit in many cases.

Designing Demand​

While overall volumes have been pretty flat this year, sales are still up, although growth is likely to be around 5% compared with 8% last year. On the plus side, we don't have any borrowings, finding staff has never been a problem as we are based in central London, and the Alara brand is doing really well.

We're also working with the Design Council on something called Designing Demand: a programme designed to help you boost your performance through design we're looking at rebranding products but also systematising the product development process.

About 50% of what we do is organic, and we have been hit by the downturn in that market, but not on Alara-branded products, which are still showing double-digit growth. But I don't think the issues are purely economic; there is also a political element here, there are clearly moves to get genetic modification back on the political agenda, for example. I also think the organic trade has suffered because it has not always had a single, clear message. It has so many messages, that it almost has no message.

We have a zero waste to landfill policy here, so all waste is segregated, which has already made people here think more carefully about how much food is being wasted. We also use biodegradable packaging film in many lines.

Ultimately, we are aiming to be completely carbon neutral, so we're looking at building a community anaerobic digestion facility next door that would take food waste streams from us and from other businesses in the area and generate sufficient electricity to power our factory and sell what's left to the National Grid.

But there are also lots of other projects going on from our 'urban vineyard' we've got 30 vines growing on a strip of land at the rear of the factory to the permaculture garden we've developed on land that was previously buried under mountains of rubbish. We've got everything growing in there from pomegranates to mulberries. We've even got beehives that produced about 100lbs of honey last year.

There is so much urban space like this in London and other cities that could be used for growing things. I don't think there is any better way of engaging in the sustainability agenda than through food. People seem to have forgotten that it grows in the ground!

FACTORY FACTS​

Location:​ Alara Wholefoods, 108112 Camley Street, London, NW1 OPF. Tel: 020 7255 9725 www.alara.co.uk

Staff:​ 50

Operating hours:​ 8am-4pm Monday to Friday

Products:​ Muesli. c230 stock keeping units. Includes organic, Fairtrade and gluten free. All Alara mueslis are made without added sugar, salt or fats. Varieties include: Goji & Yacon, Date with Cacao, Fruit, Seed & Spice, and Very Berry. Alara brand, customer brands and contract manufacturing.

Output:​ 60-80t/week

Turnover:​ c£5M

Packaging:​ Tubs, boxes, sachets, sacks, bags printed on film, labels on film etc