Phoenix Group plans growth away from rapeseed oil

Key points

• More stable oils
• Outsourcing
• Empowering staff

We operate the largest cold pressing facility in the UK, last year producing 1.5M litres of food oils. In our capacity as a value-added service supplier, we were also responsible for filling, packing and dispatching 2.7M items in 2015.

Phoenix Group was formed in 2007 by Hammond Produce, a £15M farming business based in Nottinghamshire. It currently has a 90% share in the business. Another local farm, JCM Glassford, owns 8%, and I own the final 2%.

The business was originally set up to produce biodiesel from rapeseed grown on the farms, as a way of diversifying. The biodiesel is used to power the pack houses and the supporting haulage fleet, and we sell 1.5M litres of the fuel annually to The Co-operative Group (see box).

I first worked for the Hammond family while a student studying mechanical engineering. I helped design the control systems for the biodiesel, which was a great learning experience. I kept in touch with the owners and when, in 2009, they wanted to move into food production, they took me on as md.

Initially, we had one person operating a two-day week, and a single customer – Borderfields, a rapeseed oil brand bought by Hammond. Over the past five years, we’ve grown from producing just 80,000 items a year into hopefully what will be 8M items in 2016. Current turnover stands at £1.7M.

Rapeseed oil is our mainstay, but other oils are coming very much to the fore. We’ve seen significant growth over the past year in coconut oil, and we also process linseed oil, olive oil, sunflower oil and even omega-3 rich fish oil.

Rapeseed needs to be filtered prior to bottling, whereas coconut oil has to be heated. The coconut arrives to us in solid blocks, and we’ve got to make sure it is heated correctly before it can be bottled. There are many bottlers out there that won’t consider bottling coconut, because it’s a relatively complex process.

We operate two lines at our 2,400m2 Kennelwood site, which is a few miles east of Mansfield. Both lines handle runs of around 2,000 bottles or more. Because of our relatively short runs, it isn’t economical to clean the pipes between each changeover, so we jettison them. We use braided food-grade transparent PVC hoses.

More stable oils (Return to top)

Kennelwood is where we handle the more stable oils, as well as some water products and some malt extracts for a home-brew company. We have just opened a second, smaller site 10 miles away called Southglade. That is now our ‘high-care’ site, where we are starting to produce items like syrups and salad dressings. Cider vinegar is also a likely addition. We have a further site in Hinchley, which is purely storage.

While filling is our biggest service by volume, filling on its own doesn’t offer much added-value in what is a very competitive marketplace, where anybody who’s got the right kit and a few people available is able to offer the same.

We have, therefore, moved to offer additional services, such as bespoke gift-packing. And then there are the services we can provide across the supply chain. Wherever possible, we are looking to handle a product from its conception right the way through to delivery to a client’s depot. Our relationship with Vita Coco is one example. All it has to do is supply us with a forecast and a dispatch requirement, and we order in the bottles, labels and caps, and do the rest.

We are very keen on the idea of forging long-term partnerships, which can also entail us helping with new product development. Choosing a different closure or putting a different label on a bottle, for example, could save a lot of money further down the line.

We also believe that if we can be involved with as much of the supply chain as possible, there’s less chance of things going wrong. Yes, we could leave customers with the responsibility of ordering stock, meaning it wouldn’t be our fault if something goes awry. But at the end of the day, it’s not in anybody’s interest if the product doesn’t go out.

Outsourcing (Return to top)

So, we offer true outsourcing, which we think makes us pretty unusual – at least among filling companies. If it’s something we can technically handle and it suits our capabilities, we will consider it. Whether that’s a niche product for a large corporate that can’t justify putting such a short-run through one of its machines, or an established product from a smaller company that wants to move away from manufacturing and solely focus on selling.

To make the outsourcing approach work, you have to build trust with the customer. To help achieve this, we’ve invested in a suite of bespoke apps to give them real-time access to production updates, stock reports and quality control.

The software lets the customer review up-to-the-minute data about orders and stock, making our service efficient and transparent without relying on paper copies. All the information is available to them 24/7. Similarly, if the retailer they supply to wants to do a spot-check, the app enables us to transfer information in real-time.

Despite our growth, at Kennelwood we are still only running at one-third bottling capacity, and at two-thirds pressing capacity. The challenge as we grow is that each new customer brings the need for extra storage – sometimes a lorry-load of 70,000 bottles for one customer may take weeks to clear, for instance. As much as we’d like to run a ‘just-in-time’ operation, that’s only possible once we’ve got a precise understanding of the peak and trough demands of the products we are handling.

In terms of staff, we operate a 24/5 shift pattern with scope to go up to 24/7 as and when we need it. We currently run separate shifts for both lines – with four-to-five staff on one line and five-to-six on the other. However, with new operations manager Sue Wassell on board, we are looking at moving to double-shifts on lines.

Currently, the lines are in ‘U’ shape and ‘L’ shape configurations, which are far from ideal. To get the most from the lines, and to get staff to work across them simultaneously, they should be straight. The owners are currently looking at this, as well as the possibility of getting a third line.

We could be more automated, but there are some embedded benefits in having manual operators. If we were running the same product all-day every day, then we would have a decanter and a bottle inspection system. But with small runs, it’s more efficient to keep good skilled operators on the line, inspecting as they go along.

Empowering staff (Return to top)

With an operations manager in place, the next task is developing and skilling up a team of line-leaders. We want to empower them to be wholly responsible for their line, so whenever we need to run a second shift, we’ve got someone trained and ready to go. That will be a big focus for us in the year ahead.

Overall, we’re into the second year of a three-year business plan. The intention is to be a £5M company by the end of 2017, with a significant increase in the net-profit of the business. That will be achieved by promoting our value-added services, but also by moving into the beverages, toiletries, and cosmetics sectors in order to spread our risk.

Should things really take-off, the owners will consider building another site. If we carry on growing at the same rate, there’s every chance.

In this exclusive video, Guy explains how the rapeseed oil specialist has successfully diversified into new sector.