Tea-ing up to Japan

Tea-ing up to Japan

Ringtons has reached the very gates of tea heaven but there's a lot more than tea behind the 106-year-old doorstep delivery firm's new wave of success, Jon Malton tells Brian Nicholls

Sland UniThey've broken down the Citadel gates. Ringtons sales might now penetrate Japan, where tea drinking's less a custom than historic ritual. It shows how far, literally, the famous North East door-to-door family seller of beverages and fancies now reaches after 106 years of trading.

Ah, the power of e-commerce! Ringtons once tried having high street shops in the like of Exeter, Brighton and Canterbury. But you had to sell 'a hell of a lot of tea and coffee' to cover costs, in the words of one director.

Now its sole shop is electronic, drawing orders not only from home but from overseas too, especially Japan, the Americas and Australia. No-one at headquarters in Algernon Road, Byker, knows how the Japanese latched onto Ringtons other than by surfing or having children here as students, says Jon Malton, a key figure.

"Japanese used loose tea mainly. But as Western lifestyle spreads I think there's a Japanese appetite for teabags now. Teabags are no longer associated with poor quality. Consumers In the Tiger economies also want the Englishness of the brand. Great opportunity exists in the Far East for Ringtons."

Online trading's but one in a tea-chestful of advantageous ideas and reforms Ringtons' board have unpacked while announcing recently record £41m turnover. They acknowledge the whole business to be greater than the sum of the parts as they step up:

•    Franchising
•    Rebranding, including a new logo
•    Business to business
•    A free workplace delivery service
•    Concentrated focus on a gift market for businesses and individuals
•    Improved production and delivery
•    And, to intensify all this, a divisional structure now.

Malton, for example, is divisional director developing doorstep delivery, website and the business-to-business beverage division which has tripled in size in three years to £3m sales. He promotes the brand and brand strategies, ensuring each department can achieve potential. He's from a precious breed, a corporate motivator who's entrepreneurially spirited.

He takes his responsibility for protecting a fine old firm's reputation very seriously. His was the delicate task of rebranding. "I've seen brands changed well and badly," he says. "I've seen babies thrown out with bath water. Our key was to understand what customers thought. What does Ringtons stand for? Then modernise and develop its brand to appeal also to a slightly different demographic, but retaining our rich heritage and personal touch. Trying to change without upsetting our stalwart customers."

Ringtons ExtraIt was actually a marriage of four brands. The doorstep brand, raising £27m net of VAT, is bedrock. Its vans historically had operated Monday to Friday, 9am till 5pm, tradition from days before many homes stood empty all day, all their occupants at work or elsewhere. Now deliveries are made up to 6pm or so to reach those workers wanting a delivery on their arrival home.

The daylong customer at home is often of a certain age. But other customers have said their mothers, grandmother and perhaps even great grandmothers had bought tea at the door. Some felt doorstepping an unwanted blast from the past. Hence the brand brush-up retaining heritage but unifying
identity of the diverse products. In beverages division, Ringtons is selling into cafes, hotels and restaurants where the demographic's younger, more mixed in gender, and a bit more contemporary. "We wanted to rebrand in a way the older generation would still recognise Ringtons but we would simultaneously appeal to a younger, more contemporary audience."

Is it working? "Yes, I think people like it. We now have ranges of products that sit together, looking as if a family, not individual items. Reaction's positive. The beauty of Ringtons is that we routinely come face to face with people so can spend the time explaining the change."

Focus is foremost. Till two years ago production, supply chain, brand and own label customers were all dealt with by the same people, in effect. "We suggested it might be good to divisionalise. Those producing focused on efficiency, the cost of a unit of sale. Others looked to the customers and so on. We've seen the benefits. Under the main board now come separate operating boards. Says Bolton: "The factory has worked very hard and we invested heavily, improving our efficiency and bringing down cost per unit. We've also had a healthy time in terms of new customers. We've taken on prestigious work for the top end of the retail market. And with the rebranding we've expanded our customer base.

"Doorsteps have grown healthily, beverages remarkably. Franchise business is expanding. Online is starting to boom.

"We've focused on the quality of our doorstep callers, and service levels have improved. We don't necessarily give a lot of sales training. We like to give customer service training. We're not into one-hit big sales. We're after a relationship. We train people pretty well on that. We'd rather lots of people buy a little regularly. Gentle relationships can lead to longevity."

This has proved so on Southern doorsteps. "We found reception there as good as, if not better than, in the North. We started at Sidmouth in Devon."

They hope to go on improving efficiency within the tight production ship. "But we've gone through a period of rapid growth," Malton explains. "The factory's built to put through 2.5m kilos. It's putting through 4m. So we're rejigging layout and expanding the production floor. On branding, we'll continue to do well because people want quality products, personal service and good value. That's what we offer."

Business to business sales are no longer considered a bolt-on. Malton recalls: "We had a coffee roaster almost as old as the hills. We'd seen ourselves as a tea company - even announced ourselves on the phone as 'Ringtons tea'. Everything we did was about tea. Then we woke up to the size of the
coffee market."

The firm brought in Stephen Drysdale. A customer of Ringtons, he joined from Automatic Retail Vending, ARV, on Team Valley. "He sat with us to decide what must change to turn a small, fumbling regional business into something highly professional nationally.

"He's done wonders. We drew a pyramid of building blocks, each a statement of what had to change. Staff training, for example. Now when a cafe owner phones with a machine problem, all our girls are barista trained and can talk the same language.

"We also needed a proper machine supply base instead of nine different suppliers existing. We built great relationships with fewer suppliers and good volume going through. On deliveries, we still deliver locally by van, but also have a next-day courier service. Whether your business is in Cornwall or Byker we can get there in much the same time frame.

"Customers come who'd never been interested before. Someone's just contacted us online from Whitby to say they knew us from doorstep delivery, had jumped on our beverages site and 'like the cut of your jib'. 

The company had earlier fretted about the rising emotional popularity of fairtrade tea, and how many young people prefer cold drinks. Ringtons however is a member of The Ethical Tea Partnership working to improve life for tea workers and their environment.

Malton accepts: "I don't think anyone will quell the power of Coca-Cola. Tea consumption over the years has gone down. But coffee drinking's up. We produce both. A major trend demographically is the rise of the grey population - handy for us. So we're not too worried about soft drinks. The tea market will remain big. The coffee market's big and getting bigger. Pubs too now routinely serve tea and coffee. "Their days of serving dishwater as tea have gone," Malton believes. “Customers having spent lots on a good meal are more demanding. A poor cup of tea would cost 2p to provide. A world class cup will cost three and a half. The cost of a cup of mediocrity is only fractionally less.”

Franchises recently introduced in the South are flourishing and more practical than shops would have been. They're also one in the eye for myopic banks. Upfront costs of shop ownership were 'huge'. Now a franchisee invests so risk's shared. They've a vested interest in success. Though almost everyone drinks tea or coffee, the banks weren't interested.

"Now too," says Malton, "we find the right people. Whether they've enough money for a start-up is secondary. If we believe in them we'll fund them. So a franchisee's launch cost has become £5,000 instead of around £28,000. We'll lend the rest. Who needs a bank? Response to this hands-on man and a van opportunity has been massive.

"Our canvassing teams get customers for them. They enjoy an income from day one. With this lower entry cost, more women are applying, thus a more balanced gender mix and younger people. We want ambitious people with families who are motivated."

Ringtons To Your Desk, Signature and the corporate gift market are three infants also being weaned. Signature lines give hotel guests and visitors to other places the opportunity to buy Ringtons products they may have enjoyed there. The venues get a discount. Personalised items will be likewise available. In To Your Desk, people can order online individually at work.

Ringtons delivers the collated orders there free of delivery charge. Tommy Tippee, UNW and Procter & Gamble are already participating. Corporate gift boxes for business contacts and employees are also envisaged. "Days of the bottle of whisky and the cigar across the business desk are gone," Malton suggests, seeing opportunity elsewhere too. "In hospitals, for example, you can't give patients flowers now. Visitors are looking for something different."

The operation

Ringtons’ founder Simon Smith, a former tea merchant’s messenger, came to Newcastle from Leeds and, with a business partner, a horse and cart and £250, set up the business in 1907.

Today, as staffing nears 500, Ringtons is headed by the fourth generation of the Smith family, and three fifth generation members are also with the company. Nigel, great-great grandson of the founder is chairman. Brothers Simon, who’s leading the export drive, and Colin are chief executive and director of tea and coffee packing division respectively.

Ringtons’ main warehouse and factory are at Longbenton, where tea and coffee are blended and packed. There’s a warehouse also in South Kirby, 22 sales offices around the UK, and nine franchises mainly in the South.

Delivery vans (215) call on 260,000 customers between Edinburgh and Peterborough. Ringtons products aren’t sold in supermarkets or retail outlets (bar one product sold in Morrisons for historic reasons). But it does pack and blend for leading supermarkets. It believes doorstep delivery is its best way to interact with customers, and this is its unique selling point.

The Smiths support communities through Tyne and Wear and Northumberland
Community Foundation.

9,000 applicants, one job

Jon Malton started out a commercial trainee in 1982 with (the now) Lord Haskins at Northern Foods, so disappointing his father, a banker who wanted him to be first in the family to attend university. His father’s mood changed on learning his son had beaten 9,000 applicants to the job!

Malton trained in various departments over two years. At 19 he supervised 36 staff. At 21 he’d worked in 10 towns and, in distribution, became one of the first pioneering a centralised distribution for Sainsbury’s chilled products.

At 22 he was general manager for a dairy division of 250 sales staff and a production site in York with £12m turnover. At 24, he bought a Lincolnshire family business in milk delivery. It had been under the same owner for for 50 years. He introduced himself to all 5,000 customers individually. Within two years he’d bought out or removed his four competitors, his turnover topping £1m. Having handpicked his staff, he didn’t lose even one for five years.

This company was first in field to offer customers computer-printed receipts at the door. While others suffered against supermarkets, Malton’s dairy thrived. He sold out in 1995. He later learned about a sales manager’s job at Ringtons in Hull. Through this he became Ringtons’ first manager from outside the company for 95 years!

ResponsureEntrepreneurial fever struck again. One year on, he set up his own Clover Dairies – the first firm using plastic containers that reduced the need to deliver from six times to three weekly. A year later however, his own family commitments prompted him to phone ‘the Smiths’, Ringtons’ owners, who made him a nationwide trouble shooter. He became business development manager for the South, then national sales manager until present role from 2007.

Working for Haskins had told him always to check the competition then do something quite different. Haskins also told him: “We can all make profits tomorrow, but if your reputation’s gone today tomorrow won’t come.”

What aspects of his position at Ringtons is he most conscious of, being the only non-family director? “I don’t get involved with the holding company. It’s 100% Smith owned. What does interest me is to ensure the business is still here 100 years from now. As non-family, I can behave as an executive, not a shareholder. I’m comfortable with that.”

Corbridge born, he and his wife Adele live at Whitley Bay and have two daughters - Jenny 20, and Kate 24, and sons Harvey 12, and Henry 14. His father, a Barclays banker, had raised him in Yorkshire, hence the Yorkshire accent.

A lifelong cricket fan, he loves watching his sons play at Tynemouth Cricket Club and further relaxes  cooking French cuisine – “rossini, stroganoff to die for and fish. Anything that stands still for five minutes, pour cream on it.”