Snapping into action
Raising €15 million in investment, creating 100 jobs and breathing new (indigenous Irish) life into a category as fiercely competitive and heavily promoted as biscuits. It’s no wonder East Coast Bakehouse and its management team have set the nation’s business pages alight. Gillian Hamill caught up with commercial director Daragh Monahan to learn more about how the company plans to capitalise on all the goodwill currently heading its way
Print14 July 2015
“An Ocean’s Eleven-type scenario” is Daragh Monahan’s tongue-in-cheek description of the recent reunification of the original Jacob Fruitfield management team. As has been well publicised across the business headlines, four years after the sale of Jacob Fruitfield to Valeo Foods, the five-strong team have once again come together to form a new Drogheda-based biscuit company, East Coast Bakehouse.
The company’s creation has proved headline news for a number of reasons. Firstly, a great back story (more on that later). Secondly, the creation of 100 jobs; an obvious feel-good factor. And thirdly, while Ireland has some smaller, niche manufacturers, East Coast Bakehouse is now the country’s only indigenous large-scale biscuit manufacturer. As commercial director Daragh Monahan points out: “There are essentially two ways to start a food business in Ireland; you can start on a very small basis and try and scale up or else you can start big. What we’ve discovered over the last number of years by helping some smaller food manufacturing businesses is that it’s very hard to make that quantum leap from small niche cottage-type business to being supermarket ready.”
Big beginning
By contrast, East Coast Bakehouse has set out to be the name on everyone’s lips (and dunked into their cups of tea) from the very beginning. The company has secured a total investment of €15 million, with €3.5 million raised from 12 investors – including Stephen Twaddell, a former European president of Kellogg’s, and Patrick Joy Louthman, the founder and owner of the Suretank Group – alongside backing from Enterprise Ireland. “What we have set out to do and what we have announced, is that we are starting large scale,” says Monahan. The company’s Drogheda-based factory will have bespoke, highly automated equipment which will offer “some key advantages compared to some of our competitors,” according to Monahan. “For example, our biscuit oven is 80m in length, which is extraordinarily long, probably about the length of a hockey pitch, and its width is 1.5m, so we know intuitively that we will be competitive both in the UK and Ireland.”
Given that the biscuit market is indeed such a competitive sector though, what is the company’s strategy for success? Monahan says they are planning a three-thronged approach; namely supplying private-label biscuits for retailers which he believes “very shortly” will account for approximately 80% of the company’s turnover, developing and launching the East Coast Bakehouse’s own range and offering contract manufacturing for other brands.
Importance of UK market
While Ireland is an important market for the company, given that €3.3 million worth of biscuits are purchased each week in this country alone; due to the bakehouse’s large scale, “only trying to play in Ireland” would never be a viable option. The UK market will be a lynchpin in its success. “The biscuit market in Ireland is roughly worth about €170 million at retail value. It pales into significance when you look at the UK market which is worth circa €2.5 billion,” says Monahan. Logic was also clearly at play in the company’s decision to focus on retail private label. “When I took over as sales director of Jacob’s roughly 10 or 11 years ago, private label accounted for probably about 8% of the biscuit market. Fast forward to the present, private label accounts for roughly 25-26% of the biscuit market.”
The company wants to make private label ranges for as many Irish retailers as possible moreover. “Ideally I’d like to supply all of them,” says Monahan. “It’s dangerous if you tie yourself up in an umbilical cord to just one retailer. What we want to do is we want to offer both retailer and consumer in Ireland a choice of whether or not they want to purchase Irish-manufactured product and that’s the key point.” Currently, he says: “You could say of the €3 million of biscuits eaten in Ireland every week, 99.9% of that is brought into Ireland.” Monahan is subsequently confident that retailers will be eager to secure an Irish product. “In fairness to the retailers, it’s not lip service,” he says. “They are passionate about buying Irish product and promoting Irish product within their stores.”
Delivering Irish innovation
On this topic, he adds: “One of our strengths is we want to have Irish ingredients in those products, so whether that’s Irish butter, Irish oats, etc. We also want to be extremely innovative so we are putting an Innovation Centre within East Coast Bakehouse in Drogheda where we will work with retailers and our own NPD, quality and technical people to see what other interesting ingredients we can put into a product to come up with some creative new ideas.”
At the moment, Monahan believes innovation within the biscuit category has stagnated. “We believe that there is a sameness of product on shelf across all retailers,” he says. “There has been a lack of innovation within that category. There has been some fantastic innovation in the biscuit breakfast market and in other markets as well like confectionery, with the likes of Lir, Lily O’Brien’s and Butlers, but we believe in mainstream biscuits it’s been quite stagnant for the last number of years so we’re enthusiastic about bringing in innovations within our brand and our retail own label.”
If anyone is qualified to claim they know how to shake-up the biscuit market, it’s undoubtedly the East Coast Bakehouse crew. According to Monahan, the five management members – namely, CEO, Michael Carey; marketing and innovation director, Alison Cowzer; operations director, James Yarr; chief financial officer, Gerry Murphy and Monahan himself – have over 100 years of combined FMCG experience and around 60 years’ combined experience within the biscuits industry.
Wealth of experience
Monahan alone has 24 years’ experience within FMCG. He started off “on the retail side in Dunnes Stores as a trainee which is without doubt the best training ground for any young person to get into FMCG in general”. Next, he headed to Rowntree Mackintosh as it was known at the time (subsequently Nestlé Rowntree) and later became involved in Fruitfield Foods, which was acquired by a small group including Michael Carey some 14 years ago. Monahan formed part of the management team within Fruitfield Foods, which later went on to acquire Jacob’s and become Jacob Fruitfield. That business was sold four years ago to Valeo Foods who Monahan says, are “doing a fantastic job”. He proceeds to reel off an impressive roll call of what the team have been up to since. “We all went our separate ways and did various things, I got involved in the restaurant business, Michael [became] the chairman of Bord Bia, Alison got involved in lots of different projects for example, Elivar which is a sports nutrition company, Gerry has been very busy [on the finance side] and James went on to become operations director of Blenders. We all did very different things and about a year and a half ago, conversations started to happen… I suppose we missed it,” Monahan concedes. “We got back together and said, look is the time right to introduce biscuit manufacturing back into Ireland and we felt it was.”
While he admits to missing the fast-paced world of FMCG, that certainly doesn’t mean Monahan was unhappy on the restaurant scene. He set up Zaragoza on South William Street, Dublin’s unofficial creative quarter, where he says: “There’s an amazing buzz, you would never see a guard, there’s no need. It’s everything Temple Bar isn’t.” In general, he says, “the idea of creating something from nothing is one that fascinates me, like some type of alchemist”.
Capitalising on Ireland’s reputation
He’s currently raring to go on the new venture. “I actually can’t wait to get back into FMCG,” he beams. “We’ve already had some trade meetings, following on from the announcement two weeks ago [at the time of ShelfLife’s interview on 21 June], I’ve already reached out to a number of retailers in Ireland. We’re delighted with the welcome and have already started retail discussions about range and volumes.” What’s more, the firm’s goal to provide private label products for the UK market has also been bolstered by Ireland’s reputation as a food island. Of the €170m Irish market; “about 25% of that is private label so you’re only really talking about €35million and trying to get a slice of that is difficult enough. But we have made good contacts in the UK over the last number of years, Bord Bia in fairness have done a fantastic job with Aidan Cotter as CEO in terms of marketing Ireland as a food nation and the dairy and meat companies have paved the way for us and lots of other companies. It means that when I go to the UK, the doors are already open there for you.”
The nature and scale of the UK market means that private label will be the priority for East Coast Bakehouse there. “I think the vast majority of our business in the UK will be private label,” says Monahan. “It would be extremely hard to build a brand in the UK and I would hope that we would also do some contract manufacturing for the UK, for example, produce product for UB or Fox’s or for Burton’s or Cadbury’s or somebody like that but in terms of our brand reach, I think Ireland is where we’re at in terms of that.” So when can we expect to see the East Coast Bakehouse brand on-shelf here? “We’re ordering equipment at the moment, says Monahan. “The lead time on that equipment is usually about six months so we would hopefully be in full production in quarter one, 2016.”
New equipment generates efficiency
This state of the art equipment will play a key role in ensuring the company’s success. Before its sale to Valeo in 2011, Jacob Fruitfield’s two factories in Dublin had closed down and the manufacturing of brands including Kimberly, Mikado, Coconut Creams and Club had moved abroad. Michael Carey has previously attributed this to a “highly inefficient and uncompetitive” manufacturing process. Elucidating on this subject, Monahan, whose grandfather, somewhat ironically worked at Jacob’s as well, sheds some light on the history of this machinery. Jacob’s moved from Bishop Street in Dublin 8 to Tallaght in the 1970s and brought all their equipment, dating back to the 1920s/1930s, with them. “It was extremely old and the output from that factory was incredibly uncompetitive and that business model was unsustainable when competing against such large companies as United Biscuits, Fox’s and Burton’s,” says Monahan. “We had a turnover of circa €100 million, 90% of that was in Ireland, the other 10% of that was in the UK, but it was becoming more and more difficult to compete in the UK or anywhere in mainland Europe with Jacob’s product because of the type of equipment that was on that site.”
Phenomenal goodwill
Having learnt valuable lessons from their prior experience, it’s full-steam ahead for their creative cookie concoctions and the team have been boosted by the reaction they’ve received so far. “I have been absolutely overwhelmed by the noise on social media which has been phenomenal. I set up the Facebook and Twitter account myself because I got used to doing it with the restaurant, and 48 hours after the announcement, I had over 1,000 followers on Facebook, a similar number on Twitter,” says Monahan. What’s more, the company had also received 1,400 CVs and it’s fair to say the brand already has a considerable cohort of fans in Drogheda and further afield. The business now intends to embed Bord Bia’s sustainability initiative, Origin Green, into the bakehouse as it opens, as opposed to other businesses that have retro-fitted it into their operations.
While East Coast Bakehouse is forging ahead, careful consideration has been given into how it will get its pricing right so that everyone benefits in terms of margin. Scraping the bottom of the barrel (pardon the pun) and delivering an inferior quality biscuit, only worthy of a bargain-basement price, is a fate the company is determined to avoid. “In the preparation that has gone into putting this business together, our research has been key, looking at our input prices coming in from our raw ingredients and our packaging; how efficiently can we make the product. It is an extremely competitive market so this has to work for everybody.” For the manufacturer, retailer and consumer, Monahan is adamant: “Everybody has to win here.”
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