East Coast Bakehouse

A new Irish business has revealed how it hopes to take a bite out of the UK own-label biscuit market.

East Coast Bakehouse this month announced it is investing €15m in a “state-of-the-art” manufacturing facility the size of a football pitch in Drogheda, on Ireland’s east coast. The new business has been founded by five members of the management team that established Jacob Fruitfield Group, and has support from investors including Irish development body Enterprise Ireland.

Speaking exclusively to The Grocer this week, East Coast Bakehouse commercial director Daragh Monahan said he was confident the business could be competitive in terms of price and quality thanks to the economies of scale its site would offer.

“The building we have secured is an old engineering facility. We went for it because of the length – it is 120m which is what is required for biscuit manufacturing,” he said, adding the business hoped to be in large-scale production by 2016. “The site has its own warehousing and loading bays and we are now ordering brand-new, bespoke manufacturing equipment including an 80-meter oven – there are not many of those in the UK.”

East Coast will focus on the mainstream biscuit market in categories such as cookies – described as a huge opportunity by Monahan – digestives and ginger snaps.

“Quality will be key – there has been a lot of downward re-engineering of biscuits in the past couple of years and we want to focus in on proper food credentials, including Irish butter and Irish oats,” he said.

The founders

East Coast Bakehouse has been founded by five individuals who established Ireland’s Jacob Fruitfield Group before it was sold in 2011 to Valeo Foods: Michael Carey, CEO; Alison Cowzer, marketing & innovation director; Daragh Monahan, commercial director; James Yarr, operations director; Gerry Murphy, chief financial officer.

Monahan says the five went their separate ways after selling Fruitfield but that, with more than 60 years’ fmcg experience between them, it was natural they’d get back into this market.

“The food credentials in Ireland are very good: when you go to any of the retailers in the UK that’s the feedback you get. In the past 10 or 12 years ago a number of confectionery business have opened up in Ireland - such as Lily O’Brien’s and Butlers. Their timing was very good and they now have combined turnover in excess of £100m, much of this in private label. That was our model.

“We knew we needed to open up a state-of-the-art manufacturing facility in Ireland, but there is an issue with a new food manufacturing facility: do you go niche and get very emotional about the whole thing and are then never able to make make that leap to be large-scale, supermarket ready; or do you do that from the start and raise the necessary funds to literally be ready to go into Aldi, and into Morrisons and into Carrefour and meet their price, and from the from the get-go produce quality biscuits to scale. That’s what we have done.”

Monahan added innovation would play a key role – citing the relationship between Marks & Spencer and its biscuit supplier Fox’s as an inspiration. “The quality of the M&S biscuits is fantastic,” he said. “This is because of the wonderful, umbilical relationship they have with Fox’s. We want to have that situation – we are creating a sizeable innovation centre at Drogheda and want retailers to come over play around with ingredients and come up with some creative ideas themselves for their own ranges.

While quality and innovation would be a cornerstone of East Coast, Monahan said he would not turn away business for own-label budget ranges. “I’m a realist; we’ve got to come in at different levels with a retailer but I also need a margin mix in my business too,” he added, “I’m happy to do ‘good’ if I can also do ‘better’ and ‘best’ too.”

East Coast is already in discussion with Irish retailers, whom Monahan described as “thrilled” with the launch of the business. “They now have the option to buy Irish and also a new competitor to their existing suppliers, which is great for retailers.” He added they would also welcome the flexibility the East Coast site would offer. “When Irish retailers go to PLMA or Anuga or Sial to source new products for private label, although they are big from an Irish perspective they can be seen as minnows and do encounter issues around minimum order runs.”

The business is working with Bord Bia – the Irish Food Board – in London to establish relationships with UK retailers, with plans to begin discussions here soon. “Initial conversations were had with UK retailers as part of due diligence with Enterprise Ireland,” he said. “Enterprise Ireland asked UK retailers if they would be open to a new supplier – and the answer is always ‘if they are competitive’.”

“We’re not going to enter into a race to the bottom line but we will be competitive,” he said, adding that buying raw materials from the UK and mainland and selling finished product into Sterling would benefit the business.

And he claimed the business would not be hampered by logistical issues: “We’re probably closer to a lot of the retailers in the UK than biscuit manufacturers are in the UK. I can see Wales on a clear day from the factory!”

East Coasts expects that, ultimately, between 80% and 90% of its turnover will be generated by the UK. While much of that will be from private label, the business also hopes to eventually bring its own brand to market, although Monahan said they were being realistic about this: “Creating a new brand is a very difficult thing to do”.

The new site will created 100 jobs, and the business has already employed technical & R&B workers who are working on existing biscuit recipes. “The first thing Irish retailers want us to do is replicate what they have and see where we are with price,” he said. “They also want to know how we can make them better – with Irish ingredients, for example.”