The transformation began when MD Peter Farquhar joined the business in April 2005, following a management buy-in backed by the private equity firm Langholm Capital. He decided to turn the muesli category on its head. "In the 1980s muesli was worthy and inedible," says Farquhar. "It was really only sold in whole food shops. I had an idea of taking an authentic brand and getting stuck in against the multinationals."
Farquhar, who had a classic fmcg background, having previously worked with brands such as Coca-Cola, embarked on a total brand overhaul. The logo and plastic bags of muesli were replaced with a bright new design and smart paper and acetate boxes, which had never appeared in the cereal aisle before. Pack sizes were changed, from 500g to 800g, and recipes were altered so the products contained more fruit and nuts. In fact, the name was the only thing that didn't change.
"It was not a corporate rebranding. We changed pretty much everything," he says. "The brand had to be much more mainstream."
Under Farquhar's guidance Dorset Cereals has thrived. Market share trebled within 12 months and the company continues to grow. In 2005 it had a turnover of £8.5m and Farquhar wants to hit £20m by the end of the year, with the help of new products and formats.
For example, the company now sells smaller sizes - an idea that Farquar unashamedly admits he stole from Green & Black's. "We began offering 100g sampling packs for people to take home in the same way Green & Black's was doing with its mini bars of chocolate," he says. "It was popular but it turned out to be expensive. So I came up with the idea of selling them to upmarket hotels instead. Eventually we decided to sell them as a variety pack like Kellogg's does."
The company has also entered the cereal bar category with a premium brand, Chunky Slices. "Cereal bars are growing fast and it was the obvious choice, but the majority of products on the market are high in sugar or fat. These are better for you."
The recipe uses agave, a resin from the cactus plant that binds the ingredients together and has a low GI. The high fruit, nut and seed content also makes them healthier, says Farquhar.
Expanding its range and continuing the focus on health is how Dorset Cereals intends competing with bigger players. Naturally Light Flakes was launched this year, containing 2% fat. It is being pitched against Kellogg's Special K and Nestlé's Fitnesse to attract younger consumers.
"For many people, eating a bowl of cereal is hard work so this lighter recipe will be more appealing. It is the first time we are moving into the big boys' territory, competing against their advertising and marketing clout," says Farquhar.
He has also brought about a change in company culture, which has made the business a more vibrant place to work. He describes the senior managers as "refugees from the corporate world" and says many people at the company banged on his door for work.
One lady wrote to the company saying she had just got married and really wanted a job at the company. "She had 10 years experience in product development at M&S, so I immediately said yes," says Farquhar.
The company has employed a marketing team for the first time and Farquhar anticipates it will be busy over the coming months as Dorset Cereals continues to expand. "We want to move into other areas within cereal and put a Dorset spin on it. There is plenty we can do. We've got the brand positioning right and we are looking at where we can take it."
He's not hanging about either. "We are getting 80% right and doing it well," he says. "Many big companies spend too much time worrying about the 'consumption occasion'. Each day there are 23 hours and 50 minutes when people are not eating our cereals, so we don't worry about it."
At the helm of a burgeoning brand, there appears to be little for him to worry about anyway. n
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