Tangerine executive chairman Steven Joseph tells Nick Hughes why he thinks the business has sweet prospects

As a seasoned rugby winger, Steven Joseph is used to moving at a fast pace. But the rapid ascent of Tangerine Confectionery has surprised even its combative chairman. Last February's purchase of Cadbury's Monkhill business saw Tangerine, with turnover of £160m, become the UK's largest sugar confectionery manufacturer - a mere three years after Joseph and MD Chris Marshall led a buyout of Toms of Denmark's UK confectionery arm to form the Tangerine business.

Sitting in his office at Tangerine's Pontefract liquorice factory, Joseph admits there will be no respite as he juggles plans to establish Tangerine as a major seasonal and export player with the constant pressures facing today's confectionery manufacturers. "We've come through, as an industry, a tough time in the past 18 months," he says. "Confectionery, and food generally, suffered earlier than most because of commodity price increases that really started hammering on our door at the start of last year, exacerbated by the currency decline."

Joseph carried out some detailed calculations, and found that over an 18-month period, cost prices had increased by 23% on average. When pushed on how much of that increase Tangerine itself had to absorb, Joseph is frank: "We started speaking to the trade quite early on about it but very little of it is listened to or heeded. We can dictate it to some extent on our branded products but, understandably, the retailers don't want to pass on costs to their consumers when there's a recession on."

If Joseph if sensitive to the predicament of retailers, he's less generous when it comes to their management of the confectionery category. "I think in some cases confectionery has been used as a fighting tool with other retailers. There are products they lose money on, and they come to us and say we're losing money on that product and we say, I can't sell it to you any cheaper because I'll be losing money as well."

With 50% of Tangerine's business in private label, Tangerine is to a large degree at the mercy of its retail customers. But unlike some of its rivals, notably Sweden's Candyking, the business has been able to insulate itself against the currency crash through its ethos of manufacturing exclusively in the UK.

Joseph is in the final stages of relocating production of various Monkhill brands to the UK from Europe - where they had been outsourced by Cadbury.

By the end of this year, all Tangerine products, which include the Butterkist popcorn, Princess Marshmallows, and Taverners confectionery brands, will be produced in its nine UK factories, many of which still use artisanal techniques dating back to the 1920s.

That's not to say production methods have stood still. Manufacturing has been tweaked to accommodate the drive for healthy reformulation. Joseph says his policy from day one was that Tangerine products would go 100% all natural colours and flavours. He's also led a drive to reduce saturated fat and salt from lines. He is sticking to his guns, however, on the thorny issue of sugar.

"One thing we weren't going to take out of the products was sugar. At the end of the day we are a sugar manufacturer, the clue is in the name. Where people have a problem is when they get something they don't expect. They expect sugar in sweets."

His stoic refusal to embrace sugar-free reflects Joseph's passion for the heritage of confectionery. It's a passion apparently shared by consumers, and the trend toward retro confectionery has undoubtedly played into Tangerine's hands.

Joseph reports strong demand for traditional products such as Catherine Wheels, Dolly Mixtures and, in particular, Barratt Sherbet Fountains - buoyed by a high profile relaunch in plastic tubes. But Joseph is a realist. He knows Tangerine cannot rely on the UK alone to take it to the next stage of its evolution. Further acquisitions have been ruled out in the short term because "we can't see where there are opportunities". Where he does see scope to grow the business is in export markets, seasonal confectionery and online.

Tangerine recently began a trial with Thorntons to sell its branded confectionery on the retailer's website. "It's only a few weeks in but the volumes are very encouraging to start with," he reports. "It's good from a marketing point of view to get your brand out there through other outlets."

Seasonal is another area where Joseph admits Tangerine lacks penetration. Although Easter and Christmas are traditionally chocolate events he sees "a big opportunity in sugar".

Last year, Tangerine dipped its toes in the seasonal arena with a marshmallow-based mini Easter egg under its Princess brand, but Joseph expects to bring signifcant NPD to market in the near future.

As for exports, for a £160m business, Joseph concedes Tangerine is underexposed. The pound's weakness against other world currencies could present an opportunity to address this, he believes, revealing plans to double exports in the next three to five years.

"Some of the more traditional brands such as Sharps have great recognition in what you might call former colonial markets, places such as Canada and Australia, South Africa and Hong Kong. At the moment about 5% of our turnover is in export. We should be double that."

Joseph's export ambitions don't end with branded products. "I don't see why we can't form the kind of private label relationships we have with major retailers in the UK with big retailers in France, Germany or Spain. Some of those opportunities are frightening."

Not as frightening, perhaps, as the sight of an advancing pack of forwards. Although you sense Joseph treats both prospects with equal relish.

Name: Steven Joseph
Lives: London
Family: Divorced with five children
Career: Joseph began his career at the Continental Can Company before joining Bayne & Co as a strategy consultant. In 1990, he was involved in the management buyout of confectionery and snack foods business Portfolio Foods, which subsequently purchased the Butterkist popcorn business in 1992. In 1996, Joseph played a pivotal role in selling the Butterkist business, along with its York factory, to Cadbury from whom he then bought the business back 12 years later following the creation of Tangerine.
Hobbies: Cinema, eating out, playing rugby - Joseph still plays but has made the transition from scrum half to wing. "Every week I face 18-year-olds who weigh twice as much as I do!"
Favourite Tangerine sweet: Wine gums