Good to firm going creates an even Faster 50

The Fast 50 is getting faster. This year, the average two-year compound annual growth rate (CAGR) of the first 50 runners and riders past the post was a galloping 29.3%.

Leading this year’s Fast 50 was Boparan Holdings, whose acquisition-fuelled surge to the front has seen CAGR tip the scales at 67.1%. And while this week’s results - which came in too late to be incorporated in our ranking - show a certain indigestion resulting from its acquisition strategy, they also confirm Boparan’s commitment to expansion and diversification, with sales up a further 23% to £2.9bn, following the acquisition of Vion’s poultry operations and some of its red meat assets.

Read the full Fast 50 table here

As well Boparan, this year’s top 10 is notable for the number of ‘commodity producers’ that are performing well. Simon Peacock, director at Catalyst Corporate Finance - which compiled The Fast 50 for The Grocer - singles out Vistgate (4), trading as Ocean Fish, and Westbridge Food Group (5).

“We’ve built our brand on a bedrock of defined values that drive everything we do”

Paul Lindley, Ella’s Kitchen

“These companies have a business model that is more than delivering bulk pieces of meat and fish into supermarkets, it is focused on providing strong menu solutions around meat and fish products,” he says.

In other words, the most successful commodity-based players are learning to add value, through category insight and innovation. This is a turf one normally associates with branded players, like second-placed Ella’s Kitchen. After topping last year’s list with CAGR of 89.7%, growth slowed to 60%, but its record - over a sustained period - clearly gets you noticed, and earlier this year it was acquired by Hain Daniels.

“That demonstrates to me that the larger players clearly see value in acquiring good-quality businesses in the UK,” says Peacock.

Values

The secret of Ella’s Kitchen’s success is really down to “a simple focus and vision” constantly supported by three things, says Ella’s founder Paul Lindley. “First, we’ve built our brand on a bedrock of defined values that drive everything we do from the people we recruit to the innovations that we create we absolutely believe that the successful brands will be those driving for profit and purpose.

“Second, we have an obsession with our consumer - with knowing them better than any of our competitors. And third, we have an awesome team liberated by a sense of purpose to themselves achieve our goals under our values each of the team is prepared to go the extra mile to achieve our vision.”

Tyrrells (15), another fast-growth branded player to be acquired this year (it was scooped up by private equity giants Investcorp), takes a similar approach. CEO David Milner says the secret to delivering consistently high levels of growth is having a clear vision of what you want to achieve and then communicating that to customers and staff.

“We’re very single-minded,” says Milner. “We know what we’re trying to do and we spend a lot of time communicating that through our business. So I hope that if you were to ask my marketing director or even someone making crisps on the factory floor, they would both be able to tell you what our strategy is.”

Having a robust strategy is crucial to the success of all fast-growing businesses, according to Richard Jones, marketing manager at Mornflake Cereals, which is owned by Morning Foods (47).

“You have to really understand your customer, get to know them and give them what they want. A lot of people don’t listen”

Tom Molnar, Bread Holdings

“At Mornflake, we focus on delivering the highest quality products at great value for money prices - it’s a strategy that is clearly working well,” says Jones. “We’re confident that we will continue to grow in the future as we’ve stayed true to this strategy and invested where the market is growing.”

Strategic investment has also paid dividends for Aston Manor (31). Although its CAGR slipped back slightly from last year’s incredibly strong showing, it remains solid thanks to continued investment, says Gordon Johncox, Aston Manor MD.

“Now in our 30th year, we are committing significant resources to the planting of 1,000 acres of new orchards and offering 25-year contracts to the growers,” says Johncox. “On a conservative estimate the fruit from these orchards alone will cost in excess of £50m. We continue to invest to build the capability and capacity of our operations, like the multimillion-pound new pressing facility to process the increased quantity of apples we will need to support our growth.”

People

It’s not just investment in high quality ingredients and machinery that’s important - for some businesses it’s also about investing in people. Artisan bread producer Bread Holdings (13) appears in The Fast 50 for the first time this year with impressive CAGR of 34.1%. According to CEO Tom Molnar, the secret to the company’s growth is the people he employs.

“We’re not trying to do things in the most efficient way to get the most return on the effort - we’re trying to do something out of the ordinary using people,” he elaborates. “We’re a hugely labour-intensive business with a relentless focus on the customer so our business model is basically about people on both sides. You have to really understand your customer, get to know them and give them what they want because it’s really competitive out there and a lot of people don’t listen.”

Molnar says the company’s recent growth has been aided by the backing of Risk Capital, which invested in the business in 2011. “Risk provide the kind of advice and support that you need to make sure that you don’t make the big mistakes. They challenge you on the bigger decisions and provide capital if you need it.”

And it’s clear, from talking to Ella’s Lindley and Milner at Tyrrells, that they are not only as committed to growth as ever, but excited about the prospects of being backed by a large corporate entity.

“What’s interesting about Investcorp is they have about $10.5bn of assets that they’ve invested in businesses and they don’t have any other food businesses,” says Milner. “They invested in us because they see us as a large branded international growth business, which is refreshing because that’s how we see ourselves.”

It’s unlikely that they will be the only Fast 50 businesses acquired in 2013, with Catalyst’s Peacock anticipating the list will look very different next year as a result of further M&A activity.

“The acquisition of Ella’s Kitchen and Tyrrells clearly demonstrates that businesses on the list are very desirable targets and I expect to see two or three of these businesses being sold in the next 12 months,” he says. “The sales of Ella’s and Tyrrells opened new markets for them and many of the business are attractive to international buyers as they see the potential for significant sales growth through international rollout.”

The improving economic climate will also no doubt help many of these deals to get over the finishing line, with a number of this year’s Fast 50 reporting a gradual improvement in trading conditions.

Take Highland Spring (44). Thanks to the hot weather this summer, the company achieved its highest-ever sales turnover for two consecutive months in the company’s history, according to Highland Spring Group’s strategic development director Sally Stanley. Buoyed by this sales success, the company is preparing to branch out into other areas.

“A significant portion of profit growth is projected to come from diversification into new categories by the end of 2017”

Sally Stanley, Highland Spring

“We have now reached a new stage in the company’s development and are focusing on a strategy of optimisation and diversification as the two key dimensions to future growth,” says Stanley. “Indeed, a significant proportion of profit growth is projected to come from diversification into new categories by the end of 2017.”

Given the numerous unforeseen hurdles that many of these companies have had to leap over the last few years, no one is taking anything for granted just yet. But there’s certainly room for optimism, believes Ella’s Lindley.

The trading climate going forward all depends as ever on one simple word: confidence. The confidence of consumers to spend their hard-earned money, the confidence of retailers to try new products, brands and ways to trade, and the confidence of brands to innovate and invest. As an entrepreneur, I’m always optimistic, but now for the first time in a few years I am both optimistic and confident.”

With the economy seemingly on an increasingly good to firm footing, there will be plenty of others in The Fast 50 - and even outside - confident they can tackle life’s hurdles even better next year.

The Fast 50 was produced by Catalyst Corporate Finance. Anyone wishing to discuss the rankings should contact head of global food and drink Simon Peacock at simonpeacock@catalystcf.co.uk