Transport entrepreneur Mark O’Sullivan has turned a speculative email from a South American farmer into a West Midlands business importing 80 million bananas a year. Steve Dyson reports
It was during a chat over beers and curry in September 2011 that transport manager Mark O’Sullivan started to ‘go bananas’.
O’Sullivan, then regional general manager at Birmingham haulage firm TDG Ltd, was socialising with logistics expert Peter North, who’d been working with the firm as an interim consultant.
The pair, who quickly found they got on together, were eating at the Kebabish Original restaurant in Birmingham’s Star City entertainment complex when the conversation turned to an unusual business opportunity that North was considering.
O’Sullivan, aged 38, recalls: “He talked to me about an email he’d received from a guy in Ecuador called Danilo Serrano, from the family company Ceinconsa, which had been growing bananas for the last 30 years.
“All this time the company had been packaging out people’s brands with their product, such as Fyffes and Del Monte, but Danilo – who’d been educated in the UK and is finishing his doctorate in Paris – wanted to take things in a new direction.”
In short, Serrano wanted to export direct to international markets, and was looking for transport and logistics partners to establish a new brand for his family’s bananas. North already operated a company called Logistics Partners, and was one of five companies Serrano had approached.
“As we talked over a few beers and a curry, I really got into the prospect and said I’d be keen to look into taking it up. I’d spent a long time at TDG and just felt it was the right time to do something completely different.”
Leaving a senior management role to launch a start-up company is a risky business, however – especially when, like O’Sullivan, you’ve got a wife and two young children to support.
So he started cautiously, first leaving TDG and taking up a six-month role as national operations manager at food supply chain specialists Culina Logistics, on the understanding that he could work on creating his banana project in his own spare time.
“I started developing a relationship with Danilo during the evenings, while I was setting up the company from scratch. There was so much to do: looking into things like import and export, dealing with Defra, looking into who was going to ripen the bananas, who was going to distribute them and clear them.”
Working on it in his spare time meant it took O’Sullivan more than 12 months to find the right partners for each process, running a trial with a container of bananas to see if he could make the operations work.
“Although I was immediately very interested, after three or four months I was still in doubt.But as I got to know Danilo, it became more interesting than I’d thought, and I realised this could be something very, very special.
“I started to speak to suppliers – people like Brian Eastham at Sharrocks of Preston – who’ve worked in the trade all their lives, and really got to know the banana product. And I built a big relationship with Fruesh of Shifnal, Shropshire, who’ve been in fresh produce for 12 years, where the managing director Andrew Sperling really helped me to understand the industry. It clicked when I started putting my knowledge into it, because if you’ve worked in logistics you can apply that to anything.”
Eventually, by the end of 2012, the new company BanaBay Ltd was ready to start business with four equal 25% partners – O’Sullivan and North in the UK, and Danilo and his brother Ronny Serrano in Ecuador.
O’Sullivan, the joint venture’s managing director, says: “Danilo and the family produce the banana crops, and from when the bananas leave Ecuador I’m responsible for everything: importing, ripening, marketing, selling and transporting the goods to market, and growing the brand worldwide.”
The first year’s figures from January to December 2013 look impressive for a start-up: a turnover of £2.6m, and by the end of the year more than one million bananas imported every week, ripened in the UK and then transported and sold around the UK, Ireland, Holland, Russia, Egypt and New Zealand.
Despite such volumes, poor weather meant that BanaBay had a tough 12 months: the UK was hit twice by substantial snowfalls which disrupted distribution.
The result was too much banana supply, not enough demand, and therefore lower prices. Mixed with BanaBay’s new brand as a start-up company, and the fresh produce industry’s low profit margins of 3% to 4%, this meant the company made a loss in its first year.
“It was the perfect storm,” says O’Sullivan, “but I know we wouldn’t have lost money if it had been a normal year, and that trend has not happened in the last 20 years. We’ve weathered it and are now in a much stronger position. Our brand is recognised, and we’re targeting it to become a premium banana like the Chiquita brand, which people want.
“Ecuador is already well-known for high quality bananas, one of the world’s top two countries for the fruit [the other being Columbia]. But on top of that, we’re very competitive because our bananas all come from one family, which means a ‘direct sourcing’ opportunity that the marketplace likes.
“BanaBay is effectively the grower and the controller of the supply chain, with no middle men, and that makes us more flexible.
“Also, many of our bananas are big – 30cm-plus – because of Ecuador’s temperature and humidity and our harvesting practice. For some markets this size is very good. Our smaller bananas sell in places like the UK, Malta and Ireland, and our larger bananas sell well in Russia and elsewhere in Europe.
“As the year went on we secured huge customers, like Progressive in New Zealand, now owned by the giant Woolworth
Group, where we directly supply their Countdown supermarkets. They started by taking one container a week, and this is set to become five or six a week in 2014.”
O’Sullivan also spent 2013 evolving BanaBay’s logistical operations, refining “the very best partners for each process”, changing the company’s UK ripener three times, the main transporter three times, and “moulding the business into the best solution”.
“I got to know companies working in the trade – and I’m talking about being up against billion dollar businesses everywhere you turn. We’ve had to fight hard to keep the company stable and to grow a brand that wasn’t known anywhere, but now we’re ready to grow.”
With cash flow supported by Skipton Building Society, BanaBay already has £7.8m of orders confirmed for 2014, more than three times 2013 volumes. This means shifting an average import of 1.62 million bananas a week – or more than 80 million for the year. O’Sullivan expects a profit margin of 1% to 2% for the year, and then predicts turnover of £20m
and profits of 5% for 2015.
The growth, he says, will come from new markets in China and the USA, and from diversifying to include Fair Trade bananas, organic bananas, plantains and pineapples. With new offices in Birmingham’s Jewellery Quarter, BanaBay Ltd now has five staff: one working on UK sales, two staff with Chinese backgrounds helping to explore the Far East market, one Estonian in marketing and a Spaniard on placement. “For our business, it’s crucial to have a multi-lingual team,” says O’Sullivan, who says he expects his workforce to double by the end of 2014.
He adds: “I want us to be a fantastic firm to work for. A career for life. We’ll support staff through training and development, we’re paying for their driving lessons, and trying to create other employee benefits that they want, involving them in everything in the business.
“There’s no point bringing young people in who are just going to be moving on. You want to retain them with the right pay and bonus structures. It’s all about the people and relationships. If they’re planning and buying into business principles, BanaBay is only going to go one way.”
Transport expert’s road to success
Born and brought up in the village of Market Deeping, near Peterborough, Mark O’Sullivan moved to the West Midlands in 1993 to study at Wolverhampton University. “My degree was in Geography,” he remembers, “but only because it was the subject I’d done best in at A-level. I had no idea what I wanted to do.”
As it happened, Geography was a good choice, as he landed his first job as a logistics analyst at Rieter Automotive in Halesowen in 1996, which made items like seats and interiors as a first tier supplier to Toyota.
“It was a demanding first role but it gave me inroads into logistics, and a great view of design and engineering: from the production facility to just-in-time principles. It was a fantastic job.”
In 1999, O’Sullivan joined transport company Hammond Logistics, based in Bordesley Green, Birmingham, [now owned by Bibby Distribution].
He says: “This gave me a real feel for logistics and operations – everything from service schedules, tachographs and route-planning to customer liaison.”
Then, in 2001, Sullivan moved into a role at TDG Ltd, [now owned by Norbert Dentressangl]. This was essentially running road trucks as a third party logistics company, based at Bromford Gate, Erdington, Birmingham.
“I started moving up the chain: contract supervisor, administration manager, contract manager, operations manager, general manager and then regional general manager looking after six sites.”
By this time, O’Sullivan had fallen in love with the West Midlands, settling with his wife Geraldine in Shirley, Solihull, where they now have two sons – Thomas, aged seven, and Matthew, four.
And then, after nine years with TDG, came the Kebabish curry in 2011 that changed his life, with the creation of BanaBay and foreign business travel, in the last year alone, to Ecuador, New Zealand, Malta, Dublin, Rotterdam and New Orleans.
And one last question for O’Sullivan: having gone bananas, do you actually like them? “I’ve always loved bananas and eat a lot of them – even more since I started this business.”