It had been referred to as “the growth star of the UK cake market” but earlier this month, maker of cupcakes and flapjacks, Fabulous Bakin’ Boys fell into financial strife and was recued from administration by Dutch bakery group Daelmans, which specialises in the production of coconut pastries and caramel wafers. But what has prompted the Dutch baker to swoop for the UK firm? just-food’s Hannah Abdulla investigates
Fabulous Bakin’ Boys has been manufacturing muffins, cupcakes and flapjacks from its Witney, Oxfordshire base since 1989 and supplies major UK supermarkets including Asda, Sainsbury’s and Tesco.
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Until recently, it “had been the growth star of the UK cake market”, believes research manager, Mintel Food & Drink, EMEA, Chris Brockman.
Between 2010 and 2012, for example, sales were up 17.6% versus a sales decline of 1.3% for the total UK cake/cake bar market over the same period.
“Its innovative approach was bringing new concepts to the relatively staid UK cake market and giving consumers an alternative to the Kipling/Cadbury/Premier Foods dominance in the branded offering,” says Brockman.
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“It has a fun and dynamic brand image versus the more traditional Kipling brand for example. The company itself has said it likes to think of itself as the challenger brand; ‘the kind of Ben & Jerry’s of cake’,” he adds.
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By GlobalDataIn 2010 Fabulous Bakin’ Boys capitalised on the growth opportunity of the snacking market, launching individually wrapped flapjacks, cake bars and muffins to target the “on-the-go” market. In line with this the firm purchased an automated packaging line in 2012 which would individually wrap mini cupcakes and muffins.
However it is this move among others that has fuelled speculation that “overspending” is what led to the business falling into administration on 11 April according to new managing director Richard Cooper.
Cooper was previously MD at the McCambridge Group and succeeds founders Jon and Gary Frank, who have now exited the business. He said it was “a combination of overspending and not investing more in the brand,” that led to the the downfall of the Fabulous Bakin’ Boys.
“They were managing the overspending correctly but also took their eye off NPD and brand investment,” he said.
And in a very competitive market – NPD is key argues Brockman.
“In 2013 its [FBB’s] share of the UK cake market was still just 2% versus Mr Kipling’s 16% for example,” he says.
However it’s this cross between a well-established but struggling brand that made Fabulous Bakin’ Boys an attractive acquisition prospect.
Daelmans, a 200-staff company, was established in 1909 as a private-label pastry producer. With offices in the UK and US, its products are available in most supermarkets in the Netherlands and are exported to at least thirty countries. The acquisition of Fabulous Bakin’ Boys marks Daelmans first in the UK and the buy has saved the jobs of 100 staff at the facility.
Cooper says the extensive experience Daelmans has in this sector will prove positive for Fabulous Bakin’ Boys moving forward.
“As an experienced, family-owned bakery business, Daelmans Group is able to offer its expertise and financial backing in order to give the Fabulous Bakin’ Boys brand the support it needs.”
And moreover, Daelmans can offer Fabulous Bakin’ Boys an international platform to operate from says David Murray, partner, transaction services, Ernst & Young.
“The buyer can provide a wide distribution network across Europe that it currently uses.”
But Daelmans has its eye on a bigger slice of the pie. Murray calls it an “opportunist acquisition” given the “distressed sale”.
While Daelmans Group general manager Thijmen Peter de With believes the Fabulous Bakin’ Boys “will benefit from the investment and re-invigoration that an established bakery company such as Daelmans Group can provide,” he knows all too well Daelmans only stands to gain from the purchase of a brand which “has great potential”.
“The Fabulous Bakin Boys brand offers the Daelmans Group considerable benefits as it looks to grow its presence in the UK,” he says.
“We already have a presence in the major UK multiples with our range of pastries, cakes and caramel wafers and this acquisition will help us expand our portfolio as we see the ambient cakes sector as one which offers a number of opportunities for expansion.”
Daelmans has expressed ambitions to expand across Europe and Brockman says this move will enable it to do so. As a “private label specialist with limited brand presence”, the Fabulous Bakin’ Boys acquisition allows it to move closer towards its global presence goals.
“Being a successful, independent family business the company is on a financially solid footing and has ambitions to grow its already established European footprint.
“Fabulous Bakin’ Boys gives the company a strong branded offering, with a new range of products with growth potential, in a large existing snack cake market – the UK – and offers the potential to take the FBB brand across Europe.
It develops Daelmans portfolio into newer, faster growth cake areas and I would expect the company to be able to stabilise the Fabulous Bakin’ Boys business and return it to growth,” he concludes.
