Three years after it threw open its greenhouse doors, Thanet Earth is making a profit. Will more such developments follow? Richard Ford reports
When Thanet Earth went into production as the recession hit, in autumn 2008, it seemed the worst time to open the UK’s biggest greenhouse development. Intensive, high-input horticulture and price-sensitive retail buyers don’t always mix.
Yet the timing was perfect. Soaring commodity prices in 2007 and early 2008 brought a fresh focus on food security and domestically-grown produce.
And after Thanet Earth Marketing the company that markets Thanet Earth produce made a £5m loss last year, greater efficiencies in both yields and costs and strong leadership by MD Ian Craig turned around its fortunes. According to founder Chris Mack (also executive chairman of TEM co-owner Fresca). its retail customers are demanding more produce than it can supply.
When Thanet Earth was in planning, Mack forecast that the British provenance of its crops in addition to their quality would whet retailers’ appetites. But since Thanet’s produce went into stores, Thanet Earth has benefited from retailers’ interest in its produce on a local level. Its salad crops can be labelled as grown in Kent, enabling retailers to tap the positive cues of ‘the garden of England’. “They have been able to play on the fact this is produce in Kent grown for the South East consumer,” says John Giles, divisional director at consultancy Promar International.
So what plans are there to expand? With only three of the planned seven greenhouses up and running, Thanet has finance in place to build its remaining four glasshouses, but does not anticipate building its fourth until 2012 at the earliest. It would also need to invest in more space to support increased volumes. But with strong financial backers Fresca Group purchased the site and has a 50% share in TEM, with the remaining 50% owned by Kaiij Green-houses UK, Rainbow Growers and A&A that’s unlikely to be a problem. Thanet is confident the further greenhouses will generate the extra profitability needed to claw back the £100m investment.
As Mack says, in terms of Thanet’s Dutch partners, “it’s delivered what they wanted, which was access to the UK market, and there’s satisfaction that this very unique model has worked”.
In the meantime, Thanet’s success is spurring others on. Mack says there has been a renewed interest in glasshouse production since Thanet was built.
He cites the announcement in July that the UK’s largest tomato supplier to Tesco, APS Salads, had secured £6m to acquire a new site in Kent and to invest in existing facilities. The company, which also supplies Aldi and Iceland, is targeting other big retailer contracts. And in March, Cornerways Nursery opened a seven-hectare extension to its site in Norfolk to allow it to increase production by 75%.
However, he claims finding suitable sites will be a major obstacle to more developments on such a scale. Giles agrees, claiming that a number of favourable elements converged to pave the way for Thanet, such as a supportive council, high sunlight levels, ample land, the backing of a bank and the weight of Fresca Group. “There might be one or two more, but how many people are going to be able to put in £100m?”
That may be so, but perhaps the value of Thanet Earth lies more in the message it sends out to UK horticulture, says National Farmers’ Union adviser Hayley Campbell-Gibbons. “The performance of this business is proof that confidence, investment and innovation can improve the UK horticulture sector’s output.”
And its impact could be far wider than the fruit, veg and salads sector, claims Giles. “It’s a fantastic signal in the same way as Arla saying ‘we’re going to build the biggest UK dairy up in Aylesbury’ is a massive endorsement in terms of its confidence in the UK market.”
With UK manufacturing output stunted by the recession, Thanet’s success and Arla’s plans are a credit to the ability of UK food producers to attract overseas investment at the same time as increasing domestic output.
Thanet Earth Marketing: key facts
- 50% owned by Fresca Group, 50% by Kaaij Greenhouses UK, Rainbow Growers & A&A
- Will cost £100m to build all seven greenhouses
- Crops: tomatoes, cucumbers & peppers
- Total area of site is approx. 90 hectares
- 2010 / 2011 turnover: £64m
- 2010 / 2011 pre-tax profit: £267,00 (after £5m loss in 2010)