UK meat supplier Rectory Food Group is restructuring the way it runs its business. The company is moving to a holding structure, under which its separate divisions will operate. The first to become a stand-alone unit will be its fledgling ingredients arm, which sells products from frozen fruit and veg to seeds and pulses. Dean Best spoke to Rectory founder and MD Charles Woolley about the company’s revamp and its ambitions in ingredients.
just-food: Rectory’s core business is in supplying meat to manufacturers, retailers and foodservice customers. Why did the company decide to move down the road of selling vegetable and ambient crops three years ago?
Woolley: Rectory as a business has been trading since 1996. We’d always been subject to the vagaries and the health concerns in red meat, poultry or both. While there will always be demand for poultry, I’m fairly confident in that regard, we felt we did need to spread the risk and diversify the business into something away from animal protein.
just-food: Who are the key customers for your ingredients operations?
Woolley: The larger blue-chip suppliers, food manufacturers. That’s the area we have targeted for the last three years. The first year was very slow, not much business done at all, people didn’t know who we were. The second year, we had a little bit more support and consolidation in that year and this year the response has been fairly good. However, we still aren’t as well known as some of the bigger players and there are still some very interesting target customers that we’d like to work with.
just-food: Is the launch of Rectory Food Ingredients, then, a means to build your profile in the industry?
Woolley: Yes. There are two or three reasons. As well as growing that side of the operation, we felt it warranted its own division. We felt it was significantly different from the core business. It also allowed us to carry out some plans that we had for five or six years to create a holding company with smaller companies underneath. That will allow for different opportunities for funding because each part of the business grows in a different way, requires funding in a different way and the demands of the customers are different. We are in the process of restructuring the whole group, which will be complete probably towards the end of September. The ingredients side is the first side to actually have been moved into its own stand-alone operation and there will be others that do that, which will be controlled by a holding company.
just-food: What are your ambitions for the ingredients division?
Woolley: Rectory Foods as a group ended this financial year to 31 July at GBP45m [in sales]. I would expect that the ingredients division should would be able to match that certainly within five or six years. We targeted for the first year on ingredients to have GBP5m. We should exceed that significantly.
just-food: Rectory supplies poultry and red meat internationally and has a facility in Lithuania to serve the Baltic states. Do you plan to build a national client base for the ingredients arm or are you looking further afield?
Woolley: We have access to the European market through the Lithuanian office. The short answer is ‘yes’. Whether we achieve the same rate of growth is questionable but the intention is there. We’re based in the UK and we have a lot of experience of the mentality of the buyers, method of buying and the quality but certainly Europe, particularly Germany, is an area that we should be looking at in the coming months.
just-food: Is that because of the size of the German market or does the market have specific characteristics that appeal to you?
Woolley: There is a similar use of a certain amount of further processed food and a similar style of dish. There are a number of companies that buy and source frozen vegetables and dry food ingredients – pizza companies, ready meal producers and so on. It’s quite similar in many ways to the UK and obviously a lot larger so there’s a lot more potential perhaps.
just-food: It remains, however, a very competitive sector.
Woolley: I’ve always had the view that we punch above our weight. It is competitive but we know our sourcing so there aren’t too many people that frighten us in that regard.
just-food: Commodity prices are volatile. They could benefit you but you have, of course, to get your customers to pay the higher price.
Woolley: Exactly. Garlic is a prime example. The price of garlic at the minute is rising daily. It’s something that we monitor, we advise our clients and obviously they need to make a decision based on the advice on who else they are buying from. It is a moving issue and it does change daily. All we can do is monitor it and advise the clients accordingly.
just-food: Are there any commodities you are particularly concerned about?
Woolley: Onions would be one. Give it another month to see where onion prices go. They’ve been fairly static of late but that will be an interesting one when the Polish crop comes in. Garlic as well. We sell a lot of it. We’ve seen garlic prices increase almost on a daily basis.
just-food: How would you market the ingredients business?
Woolley: We are looking to provide a professional service for the customers that are looking to outsource their buying. A number of larger buying groups do have overseas offices. We form very strong commercial relationships with the suppliers that we work with and we are very often able to supply the large multiples cheaper than their own in-house office. It’s a horrible phrase but we are a good one-stop shop for people who want to source from different destinations and perhaps don’t have the coverage of the markets that we do. You can put an office in China but that doesn’t mean to say that you know what you’re doing in Thailand.