The new ad for arch rival Warburtons, out this weekend, takes a different tack. At £5m it’s a relative snip. And it features, get this, a Japanese tourist. Visiting Britain for the first time, the Oriental gentleman is wide-eyed as the tattoo on someone’s arm, the name of a movie, a travel company, a football shirt, his hotel all mysteriously bear the same name: Warburtons. Only when he reaches his hotel room does the tourist ‘get it’. On a silver platter is a plate of toasted Warburtons bread. As he opens the window, the punchline is delivered. ‘Welcome to the Warburtons family.’
It’s a strange ad in some ways. Warburtons is as British, as Northern as it comes. Still based in Bolton and 130 years old, it has every right to trump the heritage card Premier is playing. But instead of opting for home-from-home, in the middle of a credit crunch, it’s chosen travel, tourism, foreigners. But the key, says chairman Jonathan Warburton, is family. “We’ve evolved over the years from being Bolton’s favourite bakers to Britain’s favourite but we’ve stuck to our values: people, capital investment, quality. So while the family has got bigger, it’s still family.”
As chairman of one of Britain’s oldest family businesses, Warburton cuts a patrician-like figure, but proudly northern, local colloquialisms – and mild profanities – regularly colour his language. So is he not worried about Premier and the credit crunch?
“I’m not interested in a pissing contest,” he says. “We could have made an ad that was 130 seconds long, but what would have been the point of that? Good ads don’t need as much money.” The credit crunch is more concerning. “We’ve got to dig in, keep costs down. It’s going to be bloody tough for two years minimum.”
At £1.29, the cost of a Warburtons 800g loaf compares less than favourably against the 30p large white loaf he notes on sale at Tesco. “But this is not the time to be panicking,” he says. “The multiples only want to talk about one thing: price. But I’ve spent 25 years building the business on a set of values, and I’m not going to throw it all away just because there’s a downturn. “If it was only about price, we wouldn’t sell a loaf. Neither would Kellogg’s or Walkers or Dairy Milk. Our customers buy a set of values. They need to be reinforced, not diluted. That’s what we will do.” It’s not about bragging rights, he says. It’s about “mouth feel”.
“What matters is how the bread eats. We won’t cut corners and everything we do, from the specially sealed distribution and loading bays and the heated lorries [to keep the bread at room temperature] to the business development teams with Blackberries [to ensure 99% availability] supports this.”
Second only to Coke
The business may even benefit from the downturn.
“We’ve often done well in recessions,” he says. “We’ve gone through two significant price increases in the past year, and we are still ahead of budget. The percentage of our product on promotion right now is minuscule versus bakery in general and fmcg as a whole.”
In retail grocery Warburtons is now second only to Coca-Cola, with sales of £500m making it bigger than Cadbury Dairy Milk, Walkers Crisps, Andrex toilet roll or any line bar tobacco and alcohol (and here only Stella Artois surpasses it at £518m). So it’s a billion-dollar business.
But Warburton wants more. And he’s got the wind in his sales. As well as the impact of inflation, a new 600g loaf – made possible by a change to the law dating back to the Magna Carta – will provide a cheaper price point, to inch retail sales towards the £1bn mark, though of course there’s the usual attention to “mouth feel”. (“We’ve spent a lot of time on the physical shape of the tin,” he explains.)
Warburtons’ steady rollout across the country also continues. When Warburton started in the business 26 years ago, it was a provincial bakery firm. Following 18 months as a Unilever sales rep, Warburton was the first-ever key account manager as the business dipped a first toe into the national multiple market.
Since then, he’s helped take the business to the north east, East Midlands, Scotland, West Midlands, London, south west and now Bristol. In each case, Warburtons explains, the “push” initially starts with deliveries from a distant plant. “As awareness grows, you get enough critical mass to build a bakery. So you get fresher bread and - surprise, surprise - volume goes up.”
The final piece of the jigsaw will be a new plant in Bracknell to boost London and the south east. Against a market share of 15%, versus 40% in the north, Warburton is pushing for 30% in the next three to five years. But market share is not the most important thing, he adds.
“It may take us 10 years. We are not interested in a land grab. Our national share [of 20%] is a byproduct of building a good business by making consistently good bread.” And on that basis, he argues, “why shouldn’t we?”