Key points
I’ve been with the business for 25 years and I’m now responsible for the operation at R&R Ice Cream’s Leeming Bar site – the world’s second largest ice cream factory with 22 production lines – as well as R&R’s other two sites at Kelly’s of Cornwall in Bodmin and Skelmersdale in Lancashire, the former Frederick’s Ice Cream site.
This year in the UK we will turn over about £206M, including inter-company business a big change from when I started at what was then Richmond Foods, working for James Lambert, when the business turned over £1.5M a year.
At the time I was working for Fisherman’s Friends, the cough sweet company. I’d left school at 18 and went into selling for three years, then I spent the next few years working in fast moving consumer goods, with firms such as sugar confectionery company Callard & Bowser. When I was 24, I got a call from this Richard Branson-type character, which is the best way to describe James Lambert. I thought at the time, this guy will either make me, or it will all go disastrously.
That was 25 years ago last July, when Ibrahim Najafi became group chief executive of R&R Ice Cream. I joined the Board in 1996 as national accounts director and then was made sales director in 1998. Essentially, I was the UK sales director until December last year when I became head of the UK. We’ve had 16 acquisitions and been sold three times in that time.
The thing with ice cream is everyone in the world knows what it is, thinks it’s a sexy product and has a view on it. But when you come down to its manufacture, there are lots of stainless steel pipes, lots of capital equipment and it’s not produced in some romanticised kitchen.
Engineering is a massive part of the ice cream and water ice products we make and without the right engineering skills it’s difficult to come up with innovation. The easiest products to make in ice cream are actually the 500ml pots.
The hardest things are water ice and ice cream sticks because of the process complexity and capital investment involved. With water ice you are dealing with vastly different temperatures – you are freezing down things quickly and then heating them up to release them, and that’s where the engineering comes in.
Volume and investment
Leeming Bar is the biggest volume output of the whole of the R&R Ice Cream group, turning over around £143M a year. We make one litre (1l), 2l, 4l and 500ml tub ice cream products here. We can make choc ices, cones and lollies. All the ice lolly products are made on eight lines (lines 15 to 22). We’ve got one enormous cone line, which is a factory in itself, and we’ve got one ice cream stick line. There is a bar line for making choc ices and we have a ‘sandwich’ line to make Oreo IceCream Sandwiches. We also have an ice cream roll line and the balance comprises the tub lines.
Despite adding extra production lines, our carbon footprint has gone down because of changes to the way we deal with effluent, with about £2M invested in a reverse osmosis plant in 2013, and a further £2M in a combined heat and power plant installed in the middle of last year.
We are also planning to invest €15M over the next three years – about two-thirds on this site on new water ice capacity. We will replace one old line and install another new one. And we are also going to look at putting in a new sandwich line at some stage. Over the past year we have put in a new inline filler as well. It helped us create Cadbury’s Marvellous Creations, which this year will do sales of about £4.4M from nothing.
Ice cream is a very difficult market to make money in. We have always had a strategy of buying businesses in the sector and building them up. In general, we have bought loss-making businesses or businesses that were struggling to make an adequate return and invested in bigger production facilities or invested behind that volume.
Branded and own-label
We are basically a 58% own-label business in the UK. The rest is branded, with names such as Nestlé and Mondelz. Over the next three years the proportion of own-label business will probably grow, given the growth of the hard discounters in the UK. We currently do about £33M of business a year with the discounters. Our UK online sales are worth £20M.
Both our own-label and branded businesses have got to be effective, given the challenges we face, such as the ever increasing cost to serve customers. It will be interesting to see how the discounters grow, because as they grow they will inevitably face an increase in their overheads.
The biggest challenge we face is complexity – in terms of the raw materials such as milk, chocolate, hazelnuts and almonds, which form part of the 31 different commodities purchased, and in terms of changeovers on the line.
Because water ice lollies – unlike ice cream, which is extruded into tubs – are moulded, they take longer to make. You are always balancing effectiveness versus efficiency. We are very unusual in that our sales team forecast each ice cream product line in each of their accounts.
Ice cream is basically a business where products are manufactured for stock, not least to cope with sudden changes in weather and, therefore, demand. At peak periods next year we will hold 45k pallets of product. Since last September, we have a new warehouse partner called NewCold, which has built a brand new purpose built 55k pallet cold store at Wakefield.
We run to four-week production plans. We will have an outline plan for four weeks, but obviously when you get to height of the season you have to be fleet of foot so we eventually finalise it two weeks out and it can still be changed up to a week out.
Challenges
Another big challenge we face at Leeming Bar is in getting people, particularly engineers and technical staff, because of its location and the competition from other food businesses locally. We don’t use agencies, we use seasonal staff, and employ many different nationalities. I am very proud of the ethnic diversity of the business. Staff turnover is just below 5%.
We, like the rest of the food and drink sector, have to become a more attractive employer in terms of people development. You’ve got to show people a bright future and you’ve got to be able to attract the best talent.
We operate a two-shift 24h system, basically 6am to 6pm and 6pm to 6am from Monday to Friday, with overtime at weekends when clean down and maintenance are carried out. Production starts with mixing on a Monday followed by filling, which continues through to about Friday lunchtime when cleaning-in-place starts. Obviously, we manufacture using nut ingredients and other allergens, so you have to be very careful about product segregation.
Being an own-label manufacturer, we have lots of customer audits – including unannounced audits. That’s a fact of life for us. It means you can’t drop your standards. If you operate to the hygiene levels expected of your most demanding customers, you will pass all the audits. It doesn’t matter who is walking around the factory, you should always be audit ready.
It’s important that everyone in the business understands the importance of hygiene and that takes a lot of time and training. It’s like painting the Forth Bridge – you’ve never finished it, it’s a continuous process.
For exclusive insight into R&R’s Leeming Bar operation visit our free-to-access picture gallery.
Factory facts
- Location: Leeming Bar Industrial Estate, Northallerton, DL7 9UL
- Staff numbers: 540, rising to 720 at times of peak production
- Products: Branded products including Fab, Fruit Pastilles, Nobbly Bobbly, Cadbury, Oreo, YooMoo and a wide portfolio of own-label products
- Customers: The major retailers and wholesalers
- Factory size: 34,000m2
- Production lines: 22
- Annual production: 250M litres a year
Personal
- NAME: Mike Fraine, UK and Ireland country manager
- AGE: 49
- DOMESTICS: Married to Sally with two sons: Will, aged 19, and Tom, 9
- OUTSIDE WORK: Watching my younger son play cricket, being a Manchester City season ticket holder and playing golf
- GREATEST ACHIEVEMENT: Playing a significant part in helping to build this business
- ADVICE TO YOUNGER SELF: Don’t let your mind be the limit of your ambition