In an overlooked corner of south Leeds there is a manufacturer that can trace its history back to 1827. Yet Symington’s today seems more than focused on growing its market share in dried food even in the height of the recession – partly with the help of a brand made famous by Andy Warhol. In November last year the £120m company secured £10m in additional backing from Yorkshire Bank, existing management and Hermes private equity to fund further growth, which included new product development and its first entry into the gravy market with its Aunt Bessie’s brand.
The Andy Warhol connection is Campbell’s Soup – but not the soup tin made famous by the Pop artist; the dried version. The company has entered into a 10-year joint venture with Campbell’s Inc of the US to produce it. The first products from this range were launched in January. 1827 was the year when founder William Symington first moved south from his native Scotland with a desire to continue his plans for producing dried food. The family company developed a process technology to develop pea flour, which in effect was the origins of dried soup. In case anyone should doubt the health benefits of such a way of eating, William himself survived at the head of the company until he died in 1898 – so much for Victorian short lives. By that time, the company had become a major supplier of food for the troops in the Crimean War, and not long after Symington died the company was supplying food for many of Captain Scott’s expeditions to the Antarctic.
When one of Scott’s food dumps was rediscovered 50 years later, the tin of dried pea soup from Symington’s was still in perfect condition. To be fair, most of this happened with little or any Yorkshire connection – for much of its history the company was headquartered in the Midlands. It was only as a result of a number of mergers that the company now has its headquarters in Beeston. That was where Brand Partnership, one of Asda’s rice suppliers, was located when it took over Symington’s in2002 and decided to use the Symington’s name thereafter. But significant investment was made into the Leeds operation at the time, particularly into its high-speed soup production technology, and the company has been expanding onto neighbouring sites ever since. The latest plan is to take over a site currently being occupied by a Vodafone factory that is being relocated.
The company, which employs 600 people, has doubled its turnover in three years, and hugely upped production. Three years ago, 260,000 cases a year were coming off the Beeston site, where 500 people work. Now the figure is 630,000. The Campbell’s deal is the latest in a series of deals the company has undertaken in recent years that have seen the percentage of branded goods it produces increase from 35% three years ago to 65% today, with a target to reach 80% branded eventually.
The move towards more branding was started by Andy Micklethwaite and Tim Robertshaw, the duo who bought the then £17m turnover Brand Partnership in 2000 and led the takeover of Symington’s two years later. The pair had a long track record in the food industry – Micklethwaite had worked in finance for Northern Foods and Sara Lee, while Robertshaw had been sales director at United Biscuits.
But current chief executive David Salkeld says they were surprised by the success of the first branding venture they undertook – to produce packet sauces and meals under the name of TV chef Ainsley Harriott. “They admit they tripped into Ainsley Harriott as a brand,” says Salkeld. “Neither had direct brand experience, and Ainsley worked much better than they had ever anticipated as a brand.” To be fair, however, much of the country’s most recent dramatic growth has been under the leadership of Salkeld himself.
When he took the company over in 2007, it had a turnover of £47m. Now aged 55, Salkeld started as one of British Steel’s last graduate trainees in industrial relations on Teesside in the early 1980s. Not the most auspicious time – or vocation – as the company went through a protracted steel strike shortly after he joined.
“I went through the picket lines for 13 weeks,” he says. Switching then to the food industry, he worked for Findus, Grand Metropolitan and Northern Foods in a career directed partly by his desire never to move south, unless given very lucrative terms. But before Symington’s his career high point was probably being chief executive of what in 2000 became Arla Foods, also based in Leeds.
Salkeld says he and Henrik Pade, a Dane who has followed him to Symington’s to be marketing director, can take responsibility for launching Lurpak Spreadable onto the world, and for launching Cravendale as a milk brand.
“A million people told me you couldn’t brand milk,” he says, “but it was my little baby. This was unique technology and Cravendale milk is purer because it goes through five ceramic filters. Purity, life and taste were the three consumer propositions. We brought in the Danish farmers behind Lurpak to come and see what we were doing. We gave them tea or coffee with Cravendale and asked them to guess how many days’ life was in the milk. They all said between 18 and 20. It was actually 52.” The results for Arla were spectacular.
“When I took it on in 1994 it was losing £27m a year,” he says. “When I handed it over in 2003 it was making £27m a year. That’s a big turnaround.” Not surprisingly with a success like that Salkeld has been keen to continue Symington’s drive towards producing more branded goods. He has to admit that when he first met Micklethwaite and Robertshaw at a do in Hazlewood Castle and they revealed that they had thought of selling up he had never heard of Symington’s. That might be because in the 1960s the then Symington’s management had decided to move away from producing own-brand materials. The actual Symington’s name had become little more than an endorsement brand, something it remains to this day.
“I had heard of Symington’s table cream,” he says, “but that was because my dad had heard of it, and he’s in his 80s.” Nevertheless, he and Pade did the maths, and liked what they saw.
“The categories were good, the margins were strong, but capable of adding value,” he says. “Neither of us had worked in grocery or dried food before. But they didn’t want to sell it to a big corporate. They wanted to keep it here with people who knew about brands.” With backing from Hermes, Salkeld bought and took over the company, although as he points out the ownership structure is much more co-operative than you might imagine for this size of company.
“The management and I own 40% of the company, and there are 20-odd managers,” he says. “But we are a very heavyweight management team for this size of business. Our chairman owns Booths supermarkets, our group operations director was formerly at Arla, Henrik was at Arla, our purchasing director was the UK purchasing director at Cadbury- Schweppes, and our finance director was formerly at Northern Foods.” Under Salkeld’s stewardship, the move into branding has accelerated, not just with Campbell’s and Aunt Bessie’s but also with dried food under the Crosse & Blackwell and Mug Shot labels, as well as Golden Wonder, which Salkeld is keen to point out was the original instant noodle brand before Unilever came along with Pot Noodle.
There have been more signings with personalities too. The company now produces a dried pudding range under James Martin, and is in talks with Simon Rimmer to produce a vegetarian range. All these personality brandings aren’t just brandings either. Harriott and Martin both work actively with the test kitchen at the Beeston factory, which Salkeld says is peculiarly active for a company this size.
“One of the first things we did when we took over was to double the size of the kitchen,” he says. “A business our size would usually have about four people in product development. We have 15. Last year alone we launched 234 brand-new products and refreshed 216. In all, we touched more than 450 products.” Salkeld and his team have been very careful in the way they target their marketing, too. A strategy of challenger brands has been paramount. Salkeld says it is mainly due to the shape of the dried food market.
“In a market of 61 million consumers, you have Nestle making £65bn, Unilever £55bn, and Premier around £4bn, but then nothing until you get to us. That’s a huge chasm. So if you are Tesco, you have a generic instant noodle market worth, say, £100m, of which Pot Noodle takes up probably £70m, and the rest is own label. So we have the first challenger brand. We are never going to overtake Unilever, but the challenger brand strategy has worked for us in Pot Noodle and we are now taking Batchelors head on with Campbells.
“But we are not a discounting proposition. We don’t come in to undercut the category. Previously the consumer didn’t have brand choice in noodles, now they do. They didn’t have it in gravy, now they do. They didn’t have a scaled choice in soups, now they do. To make the proposition work we try to ensure retailers get a better margin of between 7% and 10%; find a brand the consumer recognises and loves, and create a better product. It’s a virtuous circle for the business.” Isn’t he worried about the market leader just adopting another loss leader product to drive him out of business? He shrugs.
“If Unilever wanted to lose money on Pot Noodle we would be sunk,” he says. “But I don’t think their shareholders would be too pleased either.” In fact, he says, there are other marketing advantages to running a poor but fast growing second in the market. First there’s the speed of decision making, which can sometimes mean a new product goes from initial concept to finished article in just four weeks.
“We are not a battleship, but a little speedboat,” says Salkeld. But there’s more too. He says their marketing judgements and information are of more use to a retailer precisely because of the company’s size. “Our category insights, because we do own-label as well, would be valuable to a retailer,” he says. “Our views are a little bit more respected.” It’s a happy story, however, but one that could have been very different. Because in between leaving Arla and taking over Symington’s, Salkeld had another chief executive role at Grampian Foods, then Scotland’s second biggest private company and one of Britain’s biggest chicken producers. His major feat during his tenure was to move the company headquarters down to Leeds.
“I wanted it to be amongst its customers, down here,” he says. But the move proved understandably controversial for a company that had been one of Scotland’s jewels. And it proved more expensive than forecast. Although turnover grew by £500m to £1.9bn in three years, the company went from posting a £21m profit to having a £40.5m loss. Salkeld says that in September 2005 Grampian’s chairman Fred Duncan was on the point of agreeing to sell the business to him, with backing from the Royal Bank of Scotland. The first bird flu scare hit during due diligence, and the bank pulled out. Grampian has since been sold to a Dutch conglomerate.
“It’s very difficult to be heavy in agriculture and in value-added,” he says. “The company had 264 chicken farms, with 3.4 million chickens coming off the farms every week whether the customers wanted them or not. Furthermore the meat industry is unusual in that value comes when you break things apart, rather than add them together, so the value of what you have left is critical. My thrust at Grampian was to be front end. Obviously that created tensions. But I still think having a front end focus on the meat industry is the right one. Look at the success [East Yorkshire pork and animal producer] Cranswick have had.” His first few weeks at Symington’s began to look rocky, too. “I had only been in a month when we had waves of raw material cost increases, and I had to deliver the company’s first cost price increase in seven years,” he says. “If you have ever tried to get one of those out of Tesco, you’ll know it’s not an easy task.” The next challenge came in July 2008 when the company’s distribution partner Macfarlane’s went into administration. Symington’s has now bought its old site in east Leeds as a distribution depot.
“We still had a huge ambitious development programme,” says Salkeld. “We put our foot on the gas pedal of growth and the factory creaked.” It certainly has. The company has just delivered its seventh cost price increase in three years. But few seem to be complaining.