Pork giant Tulip to invest ‘up to £70M’ in 2018

The pork specialist was entering “an exciting period” of expansion following the completion of a financial turnaround in June – three months earlier than expected – chief executive Steve Francis claimed.

It meant parent company Danish Crown was able to commit close to double its average annual expenditure on Tulip in 2018, “a huge commitment in the context of Brexit”, he added.

Danish Crown has invested around £400M in its UK business over the past 12 years.

In June, Tulip reported a £21.8M loss for the year to September 30 2016, citing the loss of key contracts, a fall in operating efficiency and inflation as factors.

Francis told FoodManufacture.co.uk that Tulip would be “deepening its exposure” to high welfare farming in the UK, and “deepening its commitment” to its vertical supply chain, meaning that “both customers and consumers know which farms their products came from, and that those farms are more of our own farms”.

“We have some exciting plans that will demonstrate quite clearly to the market that Danish Crown and Tulip are in invest mode” he said.

‘Invest a record amount’

“I would be surprised if we don’t invest a record amount next year. In fact, we will probably invest more than double our average. We are not only investing in equipment, we might be making some acquisitions as well.

“We think the integrated farm-to-fork supply chain, with British pigs, where we know the origin, and we control the genetics, the feed, and the health regime of those pigs – is a very powerful foundation for our customers. And more and more, they are looking for it.”

A turnaround specialist, Francis was hired in September 2016 to reverse falling sales at Tulip, which operates 16 sites and employs in the region of 7,000 people in the UK.

His strategy included restructuring the company into four divisions – Tulip Fresh, Tulip Added Value, Tulip Agriculture and Dalehead Foods. Francis also claimed to have realigned the business to be more responsive to the needs of customers.

“At Christmas and Easter, we made absolutely sure that we gave the customers full service – because one of the areas I think Tulip had fallen away on in recent years was delivering all of the customer orders on time, in full,” Francis said.

“While a shortage of UK pork over the past year has put us in a strong position compared with many in the market, I think it’s probably fair to say this has been one of the largest and fastest turnarounds in the food industry for a few years – to go from where we were to a trading profit, on an EBIT [earnings before interest and taxes] week-by-week basis.”

Ignoring the recipe book

Francis also said Tulip went against “what the recipe book said”, which was take costs out by removing middle management.

“Instead, we hired new site directors and have a completely revamped commercial team. In fact, half of the managers who will be attending our Senior Leadership conference later this month have joined the company in the past year.”

The turnaround hasn’t all been plain sailing. In July, Tulip announced plans to cut 118 jobs at its King’s Lynn cooked meat production plant, and change the facility’s working week from seven days to five.

Francis said the cuts were a consequence of consumers moving away from cooked meats, and towards food-to-go products and ready meals.

“King’s Lynn remains a very important part of our business, and the commercial teams have a big objective this year to make sure that we put business back into the factory. But the markets do change, and we do need to react to that,” he explained.

In May, Danish Group chief executive Jais Valeur revealed that he planned to retain all 16 of Tulip’s UK sites.

Meanwhile, both Valeur and Francis featured in the May issue of Food Manufacture, where they discussed in detail their plans for turning Tulip’s fortunes around.