Which Trendy Food Will Turn Its Makers Into Millionaires?

By Dominic Prince Daily Mail, London

WWR Article Summary (tl;dr) The artisan food industry in the U.S. has been booming over the past several years. Speciality food saw a record year in 2014. For the first time ever, total U.S. sales topped $100 billion. It looks like the trend is strong in the U.K. as well. As this Daily Mail article points out, many of the big British brands are scooping up small food producers instead of starting their own niche brands.

Daily Mail, London

It was once the case that the food sector had more individuals on the annual Rich List than any other industry.

But the emergence of telecoms, property and industrial firms means that the billionaires running these giants now pepper the list.

There are signs of a renaissance in food and drink, though, and there is one part leading the resurgence – the artisan sector.

Small distilleries are popping up, bakeries are flourishing, on-farm creameries making hand-crafted cheeses are opening and there's even a shop in Malton, Yorkshire, that sells only hand-crafted butter.

Britain has become a nation of foodies with an insatiable appetite for finely produced goods.

There's even a School of Artisan Food, based at Welbeck in Nottinghamshire, which runs an array of courses ranging from bread-making to brewing. Big business is waking up to the sector's huge potential.

Take Dorset Cereals, the high-end Dorchester muesli maker. It was started in 1989 by entrepreneur Terry Crabb, who sold it to the management in 2005. Three years later the business was snapped up by Wellness Foods in a pounds sterling 50m deal.

By 2012, the company had sales of pounds sterling 36m and profits of nearly pounds sterling 16m – an extraordinary margin.

So extraordinary, in fact, that in 2014 Associated British Foods coughed up a reported pounds sterling 70m for the business to add to its Jordans and Ryvita portfolio.

In 2012, Scottish mail-order butcher Donald Russell was snapped up for pounds sterling 30m by the Vestey Food Group.

Previous to that, specialist chocolate maker Green & Black's was sold to Cadbury in a pounds sterling 20m deal.

It seems large companies have neither the skill nor the innovation to start niche brands, so they buy them instead.

More recently, in April this year, Thomas J Fudge's luxury biscuit maker, run from a bakery in the West Country, was sold to its management after being in family hands for 100 years.

The Fudge family started the business in 1916, originally delivering freshly baked bread by horse and cart to the north Dorset farming community.

Today its range of sweet and savory biscuits is sold in supermarkets, with customers including Waitrose, Tesco and Marks & Spencer.

When the family looked for an exit route to end their involvement they brought in 51-year-old food veteran Paul Vita, who had previously worked at Ferrero and Allied Bakeries. Vita liked what he saw so much that he decided to buy the business himself with the help of private equity backer Livingbridge.

'So far Livingbridge have been excellent, very supportive. It's early days yet but so far so good,' he says.

In 2015, Fudge's produced approximately 6.5m biscuits per week. It grew at double the premium market growth rate, with a turnover of pounds sterling 11m and profit before tax of pounds sterling 331,000. Now Vita wants to establish Fudge as the UK's No1 premium biscuit brand. The firm employs 120 people, with 100 in the bakery, and Vita says he is confident about the future.

Although premium biscuits make up just 4pc of the biscuit market as a whole, the segment is growing 10pc per annum whereas, according to Vita, there is no growth for large-scale biscuit bakers.

Vita says: 'There's an increasing demand from customers who want to know where the ingredients come from, how they've been sourced and how the biscuits have been made.

'For instance, every single one of our Florentines has been hand-dipped in chocolate and if I said to you, 'You can have three Hobnobs or one Florentine,' I know what I'd choose.'

D EVON farmer Peter Greig comes from a family of food retailers, but his model for success is based on mail order delivery of locally sourced meat from a network of 25 Devon farms. He also has a butcher's shop in Exeter and a turnover of more than pounds sterling 1m. Greig, 59, has ambitions to grow that to pounds sterling 2m in short order.

Growth has been tricky because he knows he has to sustain the integrity of the supply chain. He also sells ready meals, and the firm has started selling its meat into the restaurant trade.

Greig says: 'When we started this business, the tide of food culture was flowing in a very different direction. Then it was price, but now more and more people are seeking integrity of the product.' Greig knows each of the farmers he works with and he knows which farm every bit of meat he sells comes from.

The horsemeat scandal helped fuel growth not just for Greig but for the whole artisan food and drink sector. It is now easier to raise money for small food ventures than it has ever been.

But, a word of caution is needed. In 2002 William Chase, a Herefordshire potato farmer who was having a tough time, decided to branch out into producing crisps under the Tyrrells brand name.

He nurtured small farm shops and refused to sell to Tesco. Nevertheless, business boomed and six years later Chase sold to Langholm Capital for pounds sterling 30m.

They did not see eye to eye and, shortly afterwards, not only did Langholm start selling to Tesco, it also cancelled buying Chase's potatoes and bought cheaper ones instead. Five years later and Langholm turned round and sold Tyrrells for pounds sterling 100m. Yesterday it was sold to US firm Amplify Snack Brands for pounds sterling 300m.

Elsewhere, Green & Black's former owner William Kendall has been critical of Cadbury's and, now, Kraft's stewardship of the firm, citing the need for immediate results once they had acquired it.

But once a food entrepreneur, always one. And what on earth was Chase going to do with all his unsold potatoes?

Turn them into spirits, of course, William Chase gin and vodka, to be precise. Only this time, he is selling it into Tesco.

*One in eight of all manufacturing jobs in the UK is in food, with exports worth pounds sterling 19bn

*30,000 food and drink firms set up every year

*When an artisan cafe called Harris + Hoole was launched, it met with rave reviews – until customers discovered it was run by Tesco

*421,000 tons of artisan bread are produced in the UK every year

*British foodmakers launch 16,000 products annually – more than in France and Germany combined

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