Q: You’ve recently been crowned the entrepreneur of the year. And Ella’s Kitchen is the fastest-growing food and drink business in the UK. What ingredients are essential for a good entrepreneur?
A: Passion about your product rather than just making money, having the creativity to overcome what can seem the impossible, and the tenacity to make 100 calls if it means getting through to the right person.
Q: You once said recessions can be a good thing for small companies. As we head towards a possible double dip, do you still stand by that?
A: Definitely. Microsoft, MTV, there is a whole raft of companies that were formed in a recession. Interest rates are very low and it means the discipline of keeping overheads low is there from the very beginning. We turned over a Ella’s Kitchen founder Paul Lindley, this week’s Guest Editor of The Grocer, talks to Ian Quinn about thriving in a recession, and going global £10m business from my kids’ playroom because I wanted to keep my overhead costs down.
Q: So what is the key to small companies succeeding in the current economic climate?
A: Cash is king and fast-growing companies can fail because they run out of cashflow. But what trumps everything is understanding your consumer.
Q: Oh come on! What do you mean?
A: Passion about the service or the product you provide shows through so clearly. It shows through to the people who work for you and sinks into the culture, and ultimately it shows through to your customers.
Q: How do you think your company has changed the market for baby/ children’s food?
A: Without being arrogant, we’ve revolutionised babyfood. By the time my Ella has babies, I don’t think there will be any glass products any more.
Q: What is your most successful product?
A: The one I’m very proud of is the Ella’s Kitchen Baby Brekkie range. Technically it was very difficult to achieve.
Q: How has the ongoing supermarket price war impacted on smaller suppliers?
A: The thing about price wars is that consumers don’t understand the real cost of food. There is an expectation that food will continually get cheaper and the supermarkets are driving that. But at the same time we’ve got an obesity problem and a poor health problem, and one of the problems is that some suppliers are looking at the composition of their foods, as the cost of food ingredients is going up all the time. It’s unsustainable over the long term.
Q: But surely promotions can be good for a fast-growth company like yours, as they encourage trial?
A: One of the things about the constant drive for promotions is the lumping together of diff erent products as though they are all the same. We’re all for getting more families to try our products and tactically that can be a good thing, but in a long-term situation they weaken the value of a brand.
Q: Do you ever say no to a retailer, and when should small companies make a stand?
A: I’m a chartered accountant by training and I’ll walk away if a deal isn’t sustainable. We need to make a profit and we need to invest in our products, and if we don’t it will not just be us but the retailer that suffers.
Q: Do small groundbreaking companies like yours have a limited shelf life before they either get bought up or run out of steam?
A: The fact that our retail market is dominated by so few players can be an incredible advantage to a small brand. Suddenly you can become national. My view is that you can continue to grow as long as you focus on your customer.
Q: You have said you want Ella’s to become a global brand. How will you do that? Surely you’ll need to sell out to a big multinational?
A: We have a big hairy goal. Our aim is to get to one billion tiny tummy touch points. But there are loads of different options as to how we achieve that. We have worked for some time with strategic experts at how we can get to be global. And we are approached all the time and will listen to everybody. But there’s not an inevitability about selling to a multinational company. Anything is possible, nothing is knocked off.
Q: What about these reports that you’re for sale? Are they true? We’ve heard an outright sale is possible at up to £50m?
A: My journey’s not done. I’m inspired by how we find ways to change the eating habits of children, and life is exciting.
Q: You have said you are particularly interested in help ‘in ways that aren’t just M&A’. Such as?
A: Bank finance is something we could explore. We already have four non-exec directors, which we could look to expand, and we could licence the brand.
Q: With Ella’s now for sale in the US, Estonia, Australia and South Africa, are there any countries off limits for a premium brand like yours? Apparently, delegates on the recent trade mission to China were asked where was Ella’s Kitchen?
A: That’s good to hear! We export to Hong Kong. We have identified mainland China as an opportunity for us. Over the next year, one of us will go over to have a look.
Q: What about Turkey and Brazil?
A:Turkey and Brazil have hugely increasing middle classes, growing numbers of educated consumers and rising demand for premium goods. Brazil is growing at 7% GDP and some places in Africa are growing at 10%. The last time the UK has had that kind of growth was during the industrial revolution.
Q: Talking of revolutions, how important are social networking sites to your company?
A: We have a database that’s growing 100% a quarter. We’ve got 15,000 Facebook fans and 4,000 Twitter users we get feedback from. We have two out of our 40 staff dedicated to social media. But what we say is of limited importance. It’s what they say to each other that defines our reputation, and we need to be on top of that.
Q: How did you come to choose singer and reality TV star Rachel Stevens as the new face of Ella’s?
A: It actually came about thanks to research we did with the University of Reading about reaching different senses. We thought the hardest sense to stimulate is the hearing, so we put new lines into some nursery rhymes and put them on our website for people to download. We chose Rachel to sing them because she’s a fantastic role model, a mother of a one-yearold who takes care of her health, and she doesn’t go down badly with fathers, either. In the first two weeks we had 2,500 downloads.
Q: What do you make of the government’s anti-obesity strategy? Does it go far enough?
A: I don’t think it’s a strategy, that’s being unkind to the word strategy. A strategy would mean the departments of health, education, Defra and the Treasury having a co-ordinated and long-term approach. A third of our kids are overweight and nearly 20% are obese and that’s going to have untold consequences on the way we fund our health service. For a government to have a strategy that fundamentally puts the responsibility on everyone but government, ie on companies and business, is very bad.
Q: As a former children’s TV executive with Nickelodeon, do you think the government is right to increase regulation of advertising to children?
A: Regulating TV in isolation is a policy that’s going to fail. The industry had to remove ads for products high in salt or sugar in children’s TV, but at the end of the day far more children watch The X-Factor than any children’s show.
Q: Still, organic babyfood is doing well. You must be encouraged by that. Why do you think organic babyfood is doing so well when organic, in general, is in decline?
A: People feel their baby is the last thing they will compromise on. When children get to three, four years old that falls off a cliff. The wider issue for organic is that most people don’t understand what organic is. Something like free-range or Fairshare is an easier concept. For us, though, organic is just one part of our business. An important part, but there are many others.
Q: Does Ella’s Kitchen source 100% British fruit, veg, meat, poultry & grain?
A: No. It’s an interesting question. When I started my blueprint, that was high up the agenda, but as we developed the business my view was that it was impossible – mangoes and bananas don’t grow in this country, after all. But we are making sure that we understand the supply chain for all our agreements and we will be making continued efforts to communicate that to our customers.
Q: What does Ella make of her father’s success?
A: She is 12 now. The company was based around the experience of my wife Alison and myself in feeding her as a baby, and she says it’s really cool but slightly embarrassing. But if nothing else I hope I have shown her you can live your dreams.
Q: Are there plans to extend the brand? What about Ella’s baby plates, cutlery? Ella’s cookbook?
A: The challenge is – we could have 100 good ideas but we have got the resources to do 10. There are interesting extensions we could look to do but they are not the priority at the moment. I have two children, one’s Ella and one is Paddy. When Paddy was four he said do you think they will ever do a Paddy’s kitchen. He is nine years old now!