Food hub bounces back from the brink

A pioneering food distribution hub set up seven years ago has just undergone a big revamp after a failed tie-up with a leading supermarket saw it come close to bankruptcy.

When Douglas Wanstall (pictured) set up his local food distribution business supplying hundreds of local products to a big retailer and others, he knew it wouldn’t be straightforward. The UK’s slide into recession made things even more difficult and saw the business come close to bankruptcy, triggering a wide change to its future direction.

It’s almost a year ago exactly that Bank Farm Produce was at the peak of its growth. The business, which sources and distributes local products from farmers in Kent, had just upped the number of product lines it supplies to five Asda stores in the county from 80 to more than 450. Alongside that it was supplying five hospitals, 11 schools, up-market hotels, food stores and restaurants in Kent and London, with a £5m turnover, predicted to quadruple by 2011. At its peak it was working with about 90 suppliers from across the region, sourcing everything from vegetables and meat, to eggs and bakery products.

“We launched a lot of products [into Asda] very quickly. Apart from a poor choice on one meat supplier, sales were above target and both us and Asda were very happy,” Mr Wanstall says. “How many other people can supply a supermarket with that many lines across so many product categories?”

Asda funded a series of in-store promotions on various products and by last March Bank Farm’s sales were averaging about £350,000 a month. But despite decent support from the supermarket, it wasn’t all plain sailing. Products were occasionally de-listed with no warning, leaving Mr Wanstall with paid-for stock without a home, and when the promotional offers stopped, sales started to suffer.

Mr Wanstall was faced with the prospect of either funding promotions himself, or passing the cost on to suppliers neither of which was a financially viable solution. “Home-made products look quite out of place on an Asda shelf next to branded products, so they need some sort of promotion,” says Mr Wanstall. “What’s more they’re a premium product, which isn’t an easy thing to sell during a recession.”

By December monthly sales had fallen to about £55,000 and Mr Wanstall reckons the business was losing about £30,000 a month. “It just couldn’t continue like that for much longer. We were verging on insolvency, which was incredibly tough on us and our suppliers. So in December we had a business planning meeting with Asda and decided to stop supplying them.”

Mr Wanstall is far from bitter about the experience and still supplies 20,000 eggs a month to local Asda stores. “The only way they [Asda] can see to stimulate sales is by cutting the price,” he says. “In a credit crunch, they’re probably right, but it doesn’t sit well with what we’re trying to achieve.”

Wanstall-store

Douglas Wanstall, Local Food Farmer of the Year 2008, wants to bring other food hubs together to share best practice and ideas

New beginning

With the main Asda deal stopped, Mr Wanstall needed to find a new outlet for the local food he was sourcing and decided to go down the online sales route. “We actually set up a website (Foodari Direct) seven years ago, but never really did anything with it.”

So last year the site was redesigned and relaunched to let people order local food and get it delivered. “IGD figures show that seven out of 10 people want more local food, but they need it to be convenient. By having a range of products in one place and being able to get them delivered, they get that.”

Selling via the site and delivering products using the existing fleet of six vans means the business retains more control over supplies, from producer to consumer, Mr Wanstall adds. “I also find it more satisfying, although admittedly it is more costly doing it yourself than supplying one supermarket.”

The business has changed its name, too. “Bank Farm was very well known in the area, but it had become synonymous with Asda. It needed to change, and in the end we struck a deal with fresher by miles at Evesham and merged it with Bank Farm Produce.”

All produce is now marketed under the fresher by miles, or Foodari Direct names. The deals with schools, restaurants, hospitals and hotels are relatively unchanged from last year, although it’s hoped this side of the business can be expanded further. “Some of the top restaurants are struggling a bit in the recession, but we still find that the really good ones have still got a waiting list. It’s probably nearer four weeks, rather than six though,” he says.

Confidence in recovery

The total number of product lines available has been reduced from 1100 to nearer 500, but Mr Wanstall is confident it will be built up again, albeit at a slower rate than before. “We want to provide a full food offer. If we have gaps we go out and look for suppliers, but they often find us.”

The business works with about 70 regular suppliers and employs 15 full time staff, compared with 25 at its peak last year. More are being recruited as the business expands. Mr Wanstall says particular attention is given to quality control, with every load checked as it arrives on to the farm before being selected and packed.

Annual turnover for the new business is projected to be about £2m, with a target of £6m by the end of 2010. “It’s quite ambitious, but we’ve got some pretty decent contracts and there’s a lot of promotion going on.”

Indeed, Mr Wanstall has recently teamed up with Food for Kent and KOS media to launch a campaign promoting fresh, local, seasonal food. He is also keen to work with other food hubs around the country and, together with Farmers Weekly 2007 Farmer of the Year, John Geldard, and others he has set up a steering group that aims to bring hubs together to share best practice, market intelligence and other ideas.

“We want to help others learn from our experience. Our aim is to replicate what we’re doing here in the sout heast with others around the country. First we need to prove that the media campaign can get the growth in sales we want. But, hopefully, we should be able to launch a similar scheme in another region by the end of this year.

“A lot of farmers moan that the supermarkets have all this power, but at the end of the day, they’re farming’s biggest customer,” he adds. “Nobody’s ever really tried to challenge them and, although I’m not deluded into thinking we can, schemes like ours at least go a small way to providing an alternative market for producers.”

The promotion of local food also helps producers gain a greater proportion of the end price and can have positive knock-on effects for other local businesses, such as abattoirs, butchers and delivery companies, he says.

Lessons learned

• Have a clear strategy and business plan – don’t try to be all things to all people

• Don’t be too ambitious – set realistic targets

• Good corporate governance is essential – have structured board meetings chaired by an independent person

• Targeted and incentivised sales people are key to helping deliver business targets

• Good financial discipline – keep a close eye on costs and revenues – make sure you always know what the numbers are doing

• Quality control is vital, particularly when supplying supermarkets

BE A LOCAL FOOD WINNER


Douglas Wanstall was last year’s Farmers Weekly Local Food Farmer of the year. If you’ve developed a local market for your own farm produce, why not enter the 2009 Awards? The winning entrant will be able to demonstrate his, or her, achievements in identifying and exploiting the local opportunity as well as the impact it has made to their business.Click here to to find out more.

farmers weekly awards logo 2009

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