Oxfordshire-based integrator Faccenda Foods has posted solid financial performance over the last five years. Jake Davies met managing director Andy Dawkins to discover what’s driving the business forward.
Faccenda’s financial results seem to have gone from strength to strength over the past five years – what’s the secret behind the numbers?
Profits have flattened a bit recently, but in brief we have restructured to become more customer-led, and changed the style and shape of our chicken business. I think that’s helped open doors with some of our existing customers, but also reassured those we began to work with when we acquired Cranberry Foods (the turkey producer). Over three years of ownership, we have grown that business in both weekly volume and market share.
What else has been happening at Faccenda?
Over the last 18 months we have been reinvesting in our people, strengthening customer relationships and looking inwards – it’s really difficult to see that in the shape of the financial results we publish, but the long-term health of the business has improved.
The challenge for any company like ours is the ability to ride the ups and downs – the commodity element of your sales. It’s the way of the world, and there’s only so much you can do to position your business correctly – all our competitors are operating in similar market conditions.
What big trends in fresh poultry are you experiencing at the moment?
We are continuing to see a trend from whole bird to more and more portions – we’re responding to that by trying to be flexible and producing the cut our consumers want.
Another focus is adding value; roast in the bag is a good example of that – consumers tend to want to buy a product that tastes the same time after time, is convenient and gives some choice in terms of flavour.
I think we will see people continue to move towards ready-to-cook, added-value products and away from buying whole birds.
How has Faccenda responded to that?
We recently invested in our site in Telford, making it a bespoke added-value site. We wanted to have everything under one roof and the flexibility to grow in scale, and range. Capacity at Telford has doubled, that’s including the volume we previously produced at Dudley.
How do you approach sales to supermarkets and other customers?
I fundamentally believe that you can’t have a barrier sitting between supplier and retailer, and then retailer and the customer. Instead, I consider it a challenge of getting raw material through the supply chain in the form and at the price that everyone wants – that means viewing the process as integrated.
I will also tell customers they can visit any part of the business, as well. That may mean a buyer choosing a random farm from a list and visiting, or turning up unannounced at a factory. It takes real confidence in your supply chain to manage that.
Who does Faccenda typically do business with?
We are a supplier to Asda, and have had a particularly strong relationship since 2004. But we’ve had an equally strong relationship with Costco since they entered the UK. We do around half of Lidl’s poultry. We also work with Sainsbury’s, Nandos and others.
One advantage for us in acquiring Cranberry was that, while our existing customers welcomed it, it opened new relationships with the businesses that worked with Cranberry, such as Morrisons and Aldi.
How are turkeys selling at the moment?
Turkey has struggled to establish itself as a weekly alternative to chicken, and I think that’s been the case for many years.
The market expanded and then contracted, and now seems to be in balance. But turkeys generate large amounts of meat and require some butchery – this presents a challenge. Another factor is chicken really being at the forefront of retailers’ price wars, the gap has widened – consumers tend to stick with chicken when it is that much cheaper.
So is the market improving as fast as I’d like it to? No. But in the long term I think there is growth in weekly turkey.
It’s also just been our fourth Christmas as a turkey supplier. With those big customers we inherited, it would have been easy to have lost market share, but it is something we have managed to maintain and even build upon.
And how about broilers?
The chicken market is under as much pressure as I’ve seen for a number of years. In my view, one of the outcomes from the financial crisis was high commodity costs and rising food prices. The result was that people changed their shopping habits.
We all shop and behave differently now. We buy more for consumption, manage waste better and look after our food budget.
Competition in this new environment has become fierce, and margins have eroded as a result. It is incumbent on us to make sure our operating costs are fit for purpose.
How is European and global trade affecting the price of a broiler?
I think even if supply and demand was better balanced – and it will come back into balance quite quickly – the changing shape of European trade and world trade may be such that the strength of the back end quarter might not recover to its previous levels.
Carcass balance is fundamentally important, and at some point you have to recover the value in order to be able to invest in your business.
How has Faccenda planned for avian influenza?
The reality of bird flu is that wild birds migrating are going to fly over some of your farms. What can you do to stop them? You can’t. What you can do is create a farming asset that absolutely understands the biosecurity risks that you’re operating under.
It’s about improving the quality of farms, and then changing the behaviour of people when they are on site – improving ventilation, cleaning and changing the way in which teams operate.
Those are the things that are going to mitigate any outbreak. You’ve got things that are outside of your control. We are lucky in that, because Faccenda grew through acquisition, we have geographically diverse farms. So if one is caught in an AI control zone, there are more that can continue as normal.
The egg sector recently rejected a levy to help pay for cleanup in the event of an AI outbreak – what are your thoughts?
This is a cross-industry problem that needs to be solved across the industry. I think the meat sector has been very joined up on this. I think we need to work closer together with our colleagues in the egg sector and come together to get things up and running again as fast as we can.
Can we eradicate it? Can we prevent it? I don’t know – but we have to manage the risks. What the industry overall is doing is incredibly joined up. But I think there should be a “backbone” of support for which we all take some risk and reward.
How is work with campylobacter reduction coming along?
Very well – the only thing that concerns me is that in order to bring it to the board room of the supply chains, the FSA began publishing league tables. They generate competition – I think as an industry we need to be able to find out what works and apply it without having to compete with one another.
From Faccenda’s point of view, we have halved our scores over the past 18 months through the work we have done. In the last three months we have optimised and are improving over and above that. We remain absolutely confident that the targets the FSA has set are achievable, and that we have got a plan that’s going to achieve them.
Andy Dawkins: A potted career history
The story goes that, having completed a degree in pharmacology and physiology, his first hirer thought “pharma” related to agriculture. It was a fortuitous mistake for whoever that was at Cargill, then Sun Valley Foods, because Andy remained there for much of his career.
He first worked in a feed mill, and had the opportunity to do some commodity trading. Next was a stint with Nutrino Feeds in the US. From there he returned to the UK to work in a supply chain role within Cargill’s seed business.
But the lure of poultry was strong, and Andy had the opportunity to join Faccenda. “I was able to take everything I’d learned at Cargill and apply it to a smaller company.” He joined the board in 2002 before being made managing director in 2009, the position he holds today.