Ambitious talk of doubling revenue is usually taken with a heavy pinch of salt. Yet just hours after announcing its acquisition of free-from bakery business Ultrapharm this morning, Finsbury Food Group CEO John Duffy was already talking about growing revenue from £20m to £50m.
Although more of a passing comment than a solid goal (he didn’t set a date for the £50m mark in his phone interview with The Grocer) it’s not an unfeasible ambition in this case. For free-from bakery is booming. Over the past year, the market has grown 18% to £143.8m [Kantar Worldpanel 52 w/e 26 March 2018] and that double-digit momentum is only set to continue. In Europe, the gluten-free bakery market is forecast to grow at around 10.6% annually between now and 2021.
Ultrapharm is doing pretty well, even measured against this rocketing growth rate. For the year ended 31 December 2017, it posted revenue growth of 35%. Finsbury’s ambitions for the business are simple. It wants to take the work Ultrapharm is already doing with major retailers – it counts M&S among its customers – and scale that up to meet growing demand.
“It’s a young business,” says Duffy. “With these businesses it’s often a long, slow process to get to something like £20m and growth then tends to come exponentially. All of a sudden they’re under enormous pressure to produce quite big chunks of capacity.”
With proven experience in the free-from market, Finsbury hopes to help Ultrapharm reach that capacity. In 2010, it entered a joint venture with number one gluten-free bread brand Genius, which resulted in the latter purchasing Finsbury’s free-from division for £21m three years later. Since then, Finsbury has largely focused on the distribution rather than manufacture of gluten-free products.
Duffy is confident Ultrapharm has what it takes to make its manufacturing side a source of excitement once again. “We’ve trialled a lot of products and tasted a lot of products,” he explains. “They’ve got the formulation, recipe process, knowledge and consistency. They have been in the game for 20 odd years and they know what they’re doing.”
All of which are important qualities in the world of free-from. But plenty has changed since Finsbury parted ways with Genius back in 2013. The rising demands of coeliac and gluten-intolerant customers, along with the increase in ‘lifestylers’, means innovation is vital. No longer are these customers satisfied with just a decent tasting gluten-free loaf – a goal that eluded coeliacs for many years – they want all the options the gluten-eating crowd has.
A quick glance at what Genius offers today tells you everything you need to know. Its list of gluten-free products includes everything from a high-fibre beetroot wrap (Warburtons launched a similar product this summer) to a triple-seeded farmhouse loaf and brioche burger buns.
So if Finsbury is going to reach that £50m mark, it will indeed have to concentrate on quality and scale – but will need a healthy dollop of innovation in there, too.