Real Good Food (RGD) is targeting the US in a bid to turnaround ailing sales at the bakery and cake decoration group.
It has created a 100% wholly owned subsidiary, Renshaw US Inc, which will trade as Renshaw Americas to grow its cake decorating export business across the region.
Renshaw Americas has secured a five-year lease on a 18,750 sq ft warehousing facility in Rockaway, New Jersey, which Real Good Food said it picked the site for its proximity to the port of Newark and as “an ideal logistical location” for onward distribution.
The new venture will initially employ a commercial team of four and will act as a sales and distribution hub to sell cake decorating products from the Real Good Food stable across the US and Canada. Its ultimate ambition is to expand on a wider scale across the rest of the Americas.
Real Good Food executive chairman Pieter Totté said the US and Canada already accounted for about 10% of the overall export sales in the cake decorating business.
“By establishing a permanent presence we believe there is scope for future growth and improved margins with operating efficiencies and better supply chain management,” he added. “We can now ship in bulk quantity directly to a storage and distribution facility in an optimal location for onward distribution. This leads to manufacturing efficiencies in our factories in the UK and ultimately better customer service and improved margins.
“With an established presence we also see the opportunity to broaden our customer base and in particular we are excited about the growth opportunity for sugar paste, as opposed to soft icing, as this market is largely underdeveloped across the Americas.”
Real Good Food has struggled in recent years as its Napier Brown sugar business suffered as prices slumped.
Following the disposal of the sugar division to French group Tereos for £44.4m in 2015, Real Good Food returned to the black in the year to 31 March 2016. It swung from a £3.5m loss to a pre-tax profit of £12.9m.
However, sales went backwards as the group continued to battle falling commodity prices. Revenues at the remaining core operations fell from £104.6m to £100.4m last year.
Real Good Food now focuses on three main markets: cake decoration (Renshaw, Rainbow Dust Colours), food ingredients (Garrett Ingredients and R&W Scott) and premium bakery (Haydens).
In a separate move today, the group rebranded its European division as Renshaw Europe, to reflect the business’s focus on cake decoration. It is based in Brussels and acts as a sales and marketing, distribution and logistics centre for a range of products across Europe.
“A common theme across all the companies of the group is a transformation from being a manufacturing led to a market led businesses,” Totté said.
“Understanding the markets in which we operate and meeting customer requirements with quality products and excellent service is a key driver for our future development. The rebranding is a manifestation of our intention to grow the Renshaw brand internationally.”