Martin Lightbody once took a multi-million pound gamble on the future. Now he’s doing it again. Siân Harrington finds out why
The clue is in the plethora of horseracing pictures adorning the boardroom walls. Scottish baker Lightbody, best known for supplying celebration cakes to multiples such as Asda, Safeway and Sainsbury, is clearly not averse to having the odd flutter.
This month MD Martin Lightbody will make arguably the biggest bet of his career when he opens a 140,000 sq ft production facility next to the existing Hamilton plant, which totals 95,000 sq ft and has room for a further 26,000 sq ft expansion.
The £25m company is going to have to generate a lot of business to fill both plants. But, says Lightbody, it has identified new markets, including a joint venture looking at export opportunities in continental Europe, and has a unique selling point that tunes into current consumer and government concerns. “We are weighing up the probability of one site being completely nut-free.”
The company supplies 70% of celebration cakes to Asda, Safeway and Sainsbury and has a 28% market share. Half its business is in generic cakes and the other in licensed products - it has just renewed its contract with Thorntons and has an exclusive UK licence with Disney.
With the new factory, it hopes to up the ante again. The factory was precipitated by a deal with Cadbury to produce the McMini cluster for McDonald’s, an agreement with Marks and Spencer and the exclusive contract with Thorntons.
It will be more automated than the existing site and the plan is to shift five million units through it by February.
Production is expected to start at the end of December and Lightbody expects to generate a £30m revenue next year and an annual turnover of £100m from the two sites by 2008.
In the first year of transition from bakery retailer to celebration cake manufacturer, revenue plummeted from £3m to practically nothing. But in a canny move, Lightbody enlisted the help of Safeway and Asda when designing his first plant. He got his first order from Safeway, Asda followed suit and then the company produced the Jane Asher range for Sainsbury.
Today, it is punching above its weight. The existing site can run six lines at any one time as well as a specialist line for the Cadbury/McDonald’s clusters. It is labour-intensive - the company employs 700 staff of which up to 400 can be working at any one time. These staff hand roll cakes with cream, hand dip turrets and are now personalising cakes for customers at Sainsbury and Asda.
The deal with Cadbury opened up a new market, says Lightbody. “We can stretch confectionery and biscuits and have lots of products in development on the food-to-go side.” For this reason Lightbody is to drop the Celebration Cakes tag from its name.
It is recruiting a national account manager for foodservice and is prepared for market consolidation.
“We have looked at a couple of deals and an acquisition is on the radar,” says Lightbody. Competition will be fierce: Inter Link Foods is aiming for number two spot in the UK cake market and sees celebration as a particular opportunity.
The race is on but Lightbody is confident it can get a nose in front. After all, it already owns a horse called Piece of Cake.
It is a tall order. But it is not the first time Lightbody has taken a “calculated gamble,” as he puts it.
Eight years ago he sold the 110-year-old family business, which comprised 20 retail bakeries and six cake shops, to Crawfords.
He used all the proceeds from the sale, plus a further £2m loan, to build a 25,000 sq ft factory - without a single advance order.
The clue is in the plethora of horseracing pictures adorning the boardroom walls. Scottish baker Lightbody, best known for supplying celebration cakes to multiples such as Asda, Safeway and Sainsbury, is clearly not averse to having the odd flutter.
This month MD Martin Lightbody will make arguably the biggest bet of his career when he opens a 140,000 sq ft production facility next to the existing Hamilton plant, which totals 95,000 sq ft and has room for a further 26,000 sq ft expansion.
The £25m company is going to have to generate a lot of business to fill both plants. But, says Lightbody, it has identified new markets, including a joint venture looking at export opportunities in continental Europe, and has a unique selling point that tunes into current consumer and government concerns. “We are weighing up the probability of one site being completely nut-free.”
The company supplies 70% of celebration cakes to Asda, Safeway and Sainsbury and has a 28% market share. Half its business is in generic cakes and the other in licensed products - it has just renewed its contract with Thorntons and has an exclusive UK licence with Disney.
With the new factory, it hopes to up the ante again. The factory was precipitated by a deal with Cadbury to produce the McMini cluster for McDonald’s, an agreement with Marks and Spencer and the exclusive contract with Thorntons.
It will be more automated than the existing site and the plan is to shift five million units through it by February.
Production is expected to start at the end of December and Lightbody expects to generate a £30m revenue next year and an annual turnover of £100m from the two sites by 2008.
In the first year of transition from bakery retailer to celebration cake manufacturer, revenue plummeted from £3m to practically nothing. But in a canny move, Lightbody enlisted the help of Safeway and Asda when designing his first plant. He got his first order from Safeway, Asda followed suit and then the company produced the Jane Asher range for Sainsbury.
Today, it is punching above its weight. The existing site can run six lines at any one time as well as a specialist line for the Cadbury/McDonald’s clusters. It is labour-intensive - the company employs 700 staff of which up to 400 can be working at any one time. These staff hand roll cakes with cream, hand dip turrets and are now personalising cakes for customers at Sainsbury and Asda.
The deal with Cadbury opened up a new market, says Lightbody. “We can stretch confectionery and biscuits and have lots of products in development on the food-to-go side.” For this reason Lightbody is to drop the Celebration Cakes tag from its name.
It is recruiting a national account manager for foodservice and is prepared for market consolidation.
“We have looked at a couple of deals and an acquisition is on the radar,” says Lightbody. Competition will be fierce: Inter Link Foods is aiming for number two spot in the UK cake market and sees celebration as a particular opportunity.
The race is on but Lightbody is confident it can get a nose in front. After all, it already owns a horse called Piece of Cake.
It is a tall order. But it is not the first time Lightbody has taken a “calculated gamble,” as he puts it.
Eight years ago he sold the 110-year-old family business, which comprised 20 retail bakeries and six cake shops, to Crawfords.
He used all the proceeds from the sale, plus a further £2m loan, to build a 25,000 sq ft factory - without a single advance order.
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