Sugar-to-ingredients group The Real Good Food Co. has successfully navigated rather challenging economic conditions and slow growth in Europe over the last few years to create a recipe for success for the firm, building a solid platform for future growth. Executive chairman Pieter Totté talks to Michelle Russell about his confidence in the business for the future, and the group’s plans for Europe and the US.

just-food: In June, the company recorded a significant increase in annual earnings. Are you expecting fiscal 2014 to be as successful?

Totté: There has been an uplift, so we expect to grow. We have a three-year plan that says by 2016 we’d like double our turnover to around GBP500m (US$799m), which is about 5-6% of bottom line, at EBITDA level. That is the objective across the group. Sugar, for instance, is about half of our business and that next year will have grown in tonnage by 4% … that is the main driver. But then [baking ingredients business] Renshaw’s is a higher-margin business and that is also a driver that provides steady growth. That is where on the export side, especially in Europe and America, we see real opportunities. Retail, you will see this season, also picking up, and we are also now developing our business-to-business division.

just-food: You reiterated you want to double the size of the business. Previously you said you’d like to do this without acquisitions. Why is that?

Totté: Well, high focus and concentration on what we’ve got … strong organic growth by bringing us from GBP250 to GBP500m organically is of course the best shareholder value you can possibly imagine.

just-food: So you would not consider making acquisitions in order to grow the business further?

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Totté: If I saw a small bolt-on acquisition that is a pure fit, but acquisitions take a lot of energy, they take ages to be integrated into your culture. [Bakery products arm] Haydens is a good example. It took three years to bring it to where it now is. We would consider small bolt-ons if they passed by.

just-food: You said at your full-year results that you’d seen improvements at your Haydens bakery division and your R&W Scott jams-to-ingredients units. Are you confident the challenges you’ve faced in these two divisions are behind you?

Totté: Haydens, which was always a problem area, is now the most exciting business we’ve got. It’s taken me long enough but I’ve got an exciting management team in place now and our customers … Waitrose, Marks and Spencer … are extremely happy and growing with us. Morrisons will probably take a big chunk because they’ve just come in, but again, it doesn’t grow overnight.

R&W Scott is the smallest business but I’m very excited about that because we’ve established a brand that we are now putting a whole range of products underneath. It takes a long time with the research etc, but we’ve recently gained a new listing with Tesco in Scotland for our jams and we’re putting resources in there on the sales side because it’s always been a manufacturing-driven business. We’ve turned that into a market-led business so you need more commercial people in that business.

just-food: Three years ago, Real Good Food started to sell brands as well as own label. The latter remains an important sector for you. In such a competitive sector, what are you doing to ensure you are competing effectively?

Totté: How I see it is that we focus very hard on what we’ve got and we develop our five factories extremely strongly as being a local producer, an efficient producer and a modern producer with the best equipment and the best people. That is half the game. Next we have our NPD resource, a centre of excellence to look at what the trends are, where they are going, so we can be trend setters in our sectors with certain products that offer a longer life and a better margin.

just-food: You export to around 30 countries in Europe and the US. Are there other markets are you are interested in exporting to?

Totté: Yes there are, but the priority for us is to get our European business sorted first … so Benelux, France, Germany, Spain and Italy. There are a few fringe ones in there as well but this is where the volume is. We have two people we have just employed in-house and we are recruiting two external people as well, so we have a team of five people that are going to drive that, totally focusing on sales.

just-food: You recently opened an office in Belgium. What are your plans for accelerating growth in Europe?

Totté: Europe is equally exciting. Ten months ago we opened our first office and it’s 100% a sales organisation. We now have 85 regular customers built up who have all grown in volume over the last three years. But also, the 85 goes up every month, another one is added every month, and that is without doing anything. So now we are going to stimulate that. We are going to the shows, we’re focusing on what’s happening in the market.

just-food: Would you look at opening a manufacturing facility in Europe?

Totté: No, we don’t need to do that. The transportation is very cost effective, but we are going to put a warehouse in Belgium as that releases volume out of Liverpool. That will be a self-contained unit and will look after the customers, logistics, services etc.

just-food: You’ve had a presence in the US for ten years. What are your plans for this business?

Totté: It’s very exciting. We have one customer, the biggest player, [cake maker] Wilton. We first researched that we had the right products for the market, which we did through the high-end sugarcraft market. Americans prefer our product because it’s very different to what they have in America so we found tremendous scope for an opportunity and that is what we’re now developing – finding channels through which we can sell. You need to do that with someone on the marketing end, someone who is an American, who has worked in that sector and who knows it backwards and we’ve got that.

just-food: So what is your ultimate goal for the US?

Totté: It’s not about what I want, it’s about what I can achieve.

just-food: Looking to fiscal 2014, what challenges, if any, lie ahead for the Real Good Food? You said in January you thought the economic environment was improving, albeit gradually. Has your outlook changed?

Totté: I’m there now. I’ve been proven right. I feel in a very good place at the moment. There are always challenges, don’t get me wrong, but I feel that I’m on top. I have the resources now, as far as people are concerned, which is what this businesses needed. It was understaffed with quality people.

just-food: So, what can investors expect from the Real Good Food over the next 12-18 months?

Totté: I like to look long-term. My three-year plan is there … I will continue to work on my GBP500-600m target. That is on track. It is all coming together and falling nicely into place. It’s how I want to see it. Sometimes its takes longer but that’s business.