Producing packaging that’s made from plants sounds like an idea straight from the pages of a science fiction novel, but Joe and Lucy Frankel and their team have turned the concept into a thriving business, writes Peter Ranscombe.
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Inspiration can come from the strangest of places. For some entrepreneurs, inspiration strikes when they’re driving along the road, while for others it comes when they reach the top of a Munro or when they come out of church on a Sunday morning. For Joe Frankel, inspiration came in the form of a spoon.
As the founder and managing director of Edinburgh-based Vegware, Joe has created what he describes as the only global completely compostable packaging company. From offices next to the Union Canal on a non-descript street in the Polwarth area of the city, Vegware has amassed full distribution throughout Europe and North America, with a mixture of its own subsidiaries and partnership deals giving it reach across Australia, New Zealand, South Africa, Hong Kong and the United Arab Emirates.
From coffee cups, cutlery and takeaway food containers all the way through to bin liners, J-cloths and napkins, Vegware uses materials derived from plants to create packaging that can be recycled and composted along with any normal food waste. Joe is assisted in his endeavours by Lucy Frankel, his sister, who joined the business in 2011 and is now its communications director, which she says covers all of the “outward-facing bits of the business”, including writing articles, making films and even “singing silly songs about packaging”.
“We always got along well as children, but there was never any expectation that we’d end up working together,” laughs Lucy. “We were working in such different areas that it’s quite funny how things have turned out.”
Lucy studied languages and then translation at the University of Leeds and spent four years in Budapest. Although she mastered the accent, the word order for the language can be a challenge and so Lucy jokes that she ended up sounding like the “Hungarian version of Yoda”.
Joe, meanwhile, was working at the Centre for Speech Technology Research (CSTR) at the University of Edinburgh, where he contributed to academic papers with mind-boggling titles like “An automatic speech recognition system using neural networks and linear dynamic models to recover and model articulatory traces”, “Speech production knowledge in automatic speech recognition” and the classic “Term-dependent confidence normalisation for out-of-vocabulary spoken term detection”.
Both careers seem a long way from running a recyclable packaging company, especially now that Vegware employs 50 staff and turns over £12m a year in the UK, with its global sales rising to around US$25m (£17m).
Yet the step-by-step story of how the team has grown the business will be familiar to a whole host of fellow entrepreneurs. But first, back to that inspirational spoon. Joe spent a year working at the University of California, Berkeley, and one day his wife came home from a farmers’ market in San Francisco with a spoon that had been made out of corn starch.
“It felt so tactile,” Joe remembers. “It reminded me of a bone spoon that my grandmother used to have. Shoppers at the farmers’ market had been using the spoons to taste samples of yoghurts.”
Some of Joe’s friends and colleagues had already been involved in start-up and spin-out companies and so he knew a good idea when he saw one. Working in California – surrounded by entrepreneurial Americans – had given him an appetite for starting his own business. He began exploring ways to license the design to bring the spoons to the UK market, but in the end it proved easier to go to the source – in this case the maker of the raw material – and start his own range from scratch, with Vegware being born in 2006.
“I started the company while I was still in America, so I was putting samples of knives, forks and spoons together into bags and heat-sealing them before sending them over to our dad, who would go down the road to the post office to send them out for me,” smiles Joe.
“When the first big shipment came in, it was all going to be stored in my sister-in-law’s attic until I found out that there was such a thing as a fulfilment centre.”
Joe clearly has fond memories of the early days of Vegware, as he balanced working at the university with getting the company off the ground. “In those days, search engines used links to reputable sources to rank results and so my connections with the University of Edinburgh and the International Computer Science Institute at Berkeley meant that Vegware very quickly became the top search result for compostable packaging,” he explains.
“Tony Stone from Stoats porridge was one of our first customers. At that point he was running a physical porridge ‘bar’ serving breakfast to customers. Now his business has grown into producing porridge ‘bars’ that you can buy in the shops, along with microwaveable porridge oats.”
Once back in the UK, Joe ran the business from home, working at a desk in his garage next to his piano. Dominic Marjoram, now his business development director, worked out of his own flat in Glasgow, helping to build the business one customer at a time.
Joe approached the growth of Vegware in the same way as he did his scientific research. He would break each process down into steps and, through trial-and-error, he would learn lessons as he went along.
“Science isn’t about ‘Eureka’ moments – you can probably count the number of those throughout history on just one hand,” he explains. “Instead, science is all about step-by-step processes. You try one iteration and if that doesn’t work then you learn from your mistakes and move onto the next iteration.
“For me, it’s all about problem solving. We identify a problem – like the high cost of disposing of unrecyclable packaging – and then we come up with a solution, like making compostable packaging that can be recycled alongside your food waste.”
Lucy began by helping out with the writing of text for the website and brochures, as well as running the Vegware stall at tradeshows, before joining the company full-time. “The stands have gone from a table with a cloth over the top – which may or may not have stayed in place – to what we have today, which can be lovely with fake grass, reclaimed pallets and fairy lights.”
As the business grew, Joe knew that he would need external finance in order to expand and keep up with demand from customers, as well as further extending the business’s overseas reach. He teamed up with Bradenham Partners, a Buckinghamshire-based private equity firm with very strong Scottish roots.
Keith Wilson, one of the founding members of Bradenham, studied business at Glasgow Caledonian University before rising through the ranks at the hospitality arm of Granada, the motorway service station legend that’s now part of Compass, eventually becoming group finance director.
He’s arguably better-known for teaming up with business partner Alastair Storey to create Westbury Street Holdings, the parent company behind catering brands including BaxterStorey, Caterlink and Searcys. Bradenham took a 20% stake in Vegware in 2009 for a six-figure sum.
Wilson’s fellow founding members are: Ian Morrison, a University of Strathclyde graduate who was a corporate finance director in Glasgow with accountancy firm KPMG before setting up Morrison Watson, a specialist corporate finance firm, in 2005; and David Robb, who studied accountancy at the University of Glasgow before serving with Spicer & Oppenheim, Pannell Kerr Forster, KPMG and Morrison Watson.
“If we’d been funded by the banks then we probably wouldn’t be here today,” Joe admits. “We chose Bradenham because of Keith’s unparalleled experience in the catering and hospitality sectors.
“We can have very honest and open and robust conversations with our investors. I would count Keith as a friend now.”
While the Vegware brand has become firmly established and the company lists major catering suppliers among its big-name clients, one part of the business that’s perhaps less well-known is its ability to add designs onto disposable cups, sandwich boxes and other packaging for its clients.
“We’ve just hired our third in-house designer,” explains Lucy. “Having their own design on their coffee cups can help small businesses that are competing with high street chains, like Pret.”
One of the most popular off-the-shelf designs for cups has been the Christmas jumper, featuring white reindeer against a dark background. “We began selling them three years ago and sold about 50 cases during that first year,” Joe says. “Last Christmas, we sold about one million of those cups.”
In total, the company sells around 200 million coffee cups each year, both directly and through its global partners. Roughly half of its packaging is produced in the UK and Ireland, with the other half made in Taiwan, allowing it to cut down on its shipping costs to customers in Asia and Australasia.
The company was given a boost in 2014 when the Scottish Government introduced waste regulations that meant businesses and public sector organisations in non-rural areas producing food waste – from cafes, hotels and restaurants through to care homes, hospitals and school canteens – had to separate out their scraps instead of chucking them in the bucket with other rubbish. At the turn of the year, the threshold was lowered from 50kg of food waste to just 5kg, meaning that more and more small businesses like cafes and takeaways have been caught up in the regulations.
When a business owner sees how much food they’re throwing away at the end of the day – and paying to be collected – then they can soon crackdown on their costs, saving money and the environment at the same time.
“It comes back to one of those problems to which we wanted to offer a solution – you can’t recycle food with plastic in it and you can’t recycle plastic with food on it,” Joe points out. “Using compostable packaging means that you don’t have to worry about whether it’s clean or not.”
Wales and Northern Ireland are also introducing tighter waste regulations that should benefit companies like Vegware, with England lagging behind. Internationally, markets such as Hong Kong and certain parts of the United States are also getting in on the act.
“The scale in America is mind-blowing,” says Lucy. “Even individual sites can have an impact. If Atlanta airport says that it’s going to cut down on its waste then they really mean business.”
Lucy’s creative side is even on show in the Vegware office. As we sit on purple and pink sofas with bright green artificial grass crunching under our feet, we’re surrounded by posters on the wall. One features a map of the British Isles, with the landmasses constructed out of fresh produce, from fruit and veg through to fried eggs and pork pies.
“That was a lot of fun to make,” laughs Lucy, describing how she and her photographer friend laid down compost onto plastic sheeting and then began over laying spaghetti as the outline for the islands, followed by all of the fresh food. The map is typical of the creativity within the company, which is reflected in its marketing materials.
Next to the poster hang rows of certificates, marking the dozens of prizes that the business has won over the past decade. On the opposite wall, a display case holds some of the 50 or more trophies that Vegware has amassed, both for its commercial and environmental credentials. Awards on the shelves include accolades from Deloitte, which has consistently included the company in its “Technology Fast 500” rankings, alongside a listing in the “Sunday Times Virgin Fast Track 100” that will see Joe and Lucy having dinner at Sir Richard Branson’s home in Oxfordshire in June.
There’s even the “Innovative Exporter of the Year” trophy from the 2014 BQ Scottish Export Awards, which are run in partnership with Scottish Enterprise, along with the “Small or Medium-sized Enterprise of the Year 2015” prize from Business in the Community Scotland.
But in amongst all the many accolades and commendations, are there any awards that stand out for the pair? “We found out that we were receiving both the Queen’s Award for Enterprise in Sustainable Development and the Federation of Small Businesses’ (FSB’s) UK Business of the Year Award within a couple of days of each other,” explains Lucy. “The FSB award was really special because we were selected by our peers from among thousands
“It was also nice to be invited to the palace and meet the Queen – but what does she know about enterprise?” Joe jokes.