The British car industry

August 27, 2014 T Farrell Leave a comment

In 1929 France overtook England as the second largest manufacturer of cars in the world.

By 1938 car manufacturing was the third largest industry in Britain.

By 1952 cars were the largest British export.

In 1960 British Motor Corporation was the tenth largest company in the world outside the United States, with annual sales of $969 million. Ford Motor of Britain was the 19th largest company outside the US, with annual sales of $753 million.

In 1965 British Ford employed 62,418 people and had capital of £195 million. BMC employed 93,000 people and had capital of £118 million. Leyland Motor had capital of £96 million. Vauxhall Motors had capital of £83 million and employed 33,754 people. Rootes had capital of £46 million.

BMC became British Leyland, and was, by 1970, the largest single exporter in Britain, shipping goods worth £320 million (equivalent to £4.3 billion today). Its marques included Rover, Morris, Mini, MG, Land Rover, Range Rover and Jaguar.

The company was brought to its knees by flawed car designs, poor management and excessive strikes by its workforce. While Rover and Morris had been merged in 1968, the constituent companies continued to act like independent companies, stealing market share from each other and failing to share information and skills.

British Leyland demonstrates the danger of grouping various companies under one management system: what if that management is incompetent? Amalgamation often makes sense (the strength in numbers argument), but mergers can also result in weak companies dragging strong companies down with them.

In 2015, the Nissan plant in Sunderland, North East England, produces more cars annually (500,000) than Italy (400,000). This demonstrates clearly that there is no inherent reason why cars can not be profitably manufactured in Britain.

Confectionery

Viennetta: the first branded ice cream dessert

August 15, 2014 T Farrell 1 Comment

A look into the background of Wall’s Viennetta.

Viennetta is produced at the Wall’s factory in Gloucester. Wall’s is owned by Unilever, the Anglo-Dutch consumer goods giant. Unilever is the largest producer of ice cream in the world, and also manufactures the Magnum, Solero and Ben & Jerry’s brands.

Sales of Viennetta totalled £328 million worldwide in 2013, according to Euromonitor.

Viennetta is an ice cream imitation of the French millefeuille cake. Unilever saved money by adapting the product from a Belgian Cornetto recipe. The packaging was based on a German Christmas log manufactured by Langnese, another Unilever subsidiary. There are no imitations of Viennetta because the process by which it is produced is protected by patent.

Viennetta was introduced from 1982. It was originally sold only in the United Kingdom, and was a Christmas-only special. The launch was successful, and Viennetta was introduced as a year-round product from 1984. Such was its popularity that Unilever did not have to lobby supermarkets to stock the product, but instead the supermarkets lobbied them. Unilever was consequently able to achieve excellent margins on the product, which the supermarkets often sold as a loss-leader.

According to Professor Geoffrey Jones, Viennetta introduced the concept of the branded ice cream dessert. For the first time, ice cream was the main item of a dessert, and not just an accompaniment to something else on the bowl or plate.

Perhaps the product’s vaguely European-sounding name was considered sophisticated in the early 1980s. Viennetta’s star may be rising worldwide, but it has a reduced presence in its native UK. In 2014 value sales were far below what they were in 1990, not even accounting for inflation.

Food, Retail

A slice of history: Bakers Oven

July 25, 2014 T Farrell Leave a comment

Bakers Oven was the largest bakery chain in Britain.

Greggs is a fast food chain with more outlets in Britain than McDonald’s. Specialising in value and convenience, outlets sell sandwiches, but remain best known for “treat” food: sausage rolls, pasties, vanilla slices etc.

Greggs’ dominance in the UK was established when it acquired Bakers Oven, its major rival bakery chain, in 1994. Bakers Oven was about 20 percent more expensive than Greggs, had more of a focus on in-store “baking” and typically offered substantial seating, which Greggs usually lacked.

Bakers Oven
Bakers Oven was a concept developed in 1976 by one of the largest British bread makers, Allied Bakeries. Allied Bakeries also owned other bakery chain fascias, with names such as City Bakeries, Martins and Strathdee, and boasted of operating a store on almost every British high street. ABF owned many prime high street sites; a legacy of local bakery chain acquisitions. They had first attempted to create a nationwide bakery chain in 1968 with the Lite Bite shops.

The claim that the first Bakers Oven was located in Barnard Castle, Durham is untrue. The location was previously operated by Carricks, a Newcastle upon Tyne bakery chain. and it was not rebranded to the Bakers Oven name until 1989.

Bakers Oven rode the rise in demand for healthier bread in the late 1980s, although it never matched the quality of genuine bakers’ produce. It became the largest bakery chain in the UK, however by the early 1990s it had began to consistently lose money. After 100 stores were divested, Bakers Oven blamed the rise of supermarket bread sales for its struggles.

The UK’s third largest bakery chain, Three Cooks, was also owned by a large British bread manufacturer, RHM (formerly Rank Hovis McDougall). The acquisition of Gladdings of Coventry took RHM to 300 outlets by the early 1990s.

Greggs differentiated from its two major rivals in being publicly listed from the 1980s onward, whilst maintaining a large family-owned stake.

A Bakers Oven Outlet in Willenhall in 1995

By 1993 Bakers Oven operated over 500 shops and employed over 5,000 people.

Greggs acquires Bakers Oven
In 1994 Greggs acquired Bakers Oven, with 424 stores and two main bakeries, for £18.5 million in cash. This took Greggs to a total of 929 outlets. Greggs was interested in expanding into the South East, where the majority of Bakers Oven outlets were based. Greggs was strongest in the North, particularly the North East, where it had a 40 percent market share in some areas. Greggs was also interested in learning about in-store baking and seated catering from the chain. As a combined group, Greggs was able to lower central buying costs and increase profitability. Greggs also announced plans to lower the pricing of Bakers Oven, which it regarded as excessive.

By 1995 Greggs had steered Bakers Oven into profitability by decreasing the focus on sliced white bread (in which they were undercut by supermarkets) and emphasising higher margin items such as sandwiches, savouries and pastries.

By 1996, 241 Bakers Oven outlets had been converted to the Greggs brand, mostly the units without in-store bakeries and seating and in less desirable locations. The Greggs model was to drive high volume value sales. However, new Bakers Oven outlets continued to be opened, and the chain was regarded as the company’s “premium brand”. In the late 1990s the chain was revamped, and items such as filter coffee and salad rolls were added to the menu.

By 2004 there were only 220 Bakers Oven outlets remaining. By 2006 the brand had been withdrawn from Scotland and the North of England, with all former outlets converted to Greggs. In December 2008 it was announced that the remaining 163 Bakers Oven outlets would be rebranded as Greggs.

Retail

Demise of W H Smith?

July 19, 2014 T Farrell Leave a comment

Dowdy, tatty, dirty and unloved stores that increasingly resemble a jumble sale, unmotivated staff and not even good value for money. It sounds like the former Woolworths chain but I was actually describing W H Smith.

Commentators have increasingly singled it out as the next potential High Street victim for closure, as shoppers increasingly gravitate towards out of town sites and online. However, I think predictions of its imminent demise are overblown.

The travel concessions (airports and train stations) are really profitable for the chain. And why not? They’re useful for travellers and the lack of competition and impulse buy nature of the sites mean that they can command high prices with healthy margins.

The high street shops have several USPs:

1. Trashy, mass market books. Better coverage than Waterstones and the supermarkets. These impulse buys will not gravitate online.

2. Really comprehensive magazine stocking.

3. Stationery. Unless there is a Rymans nearby, there are few competitors. And people don’t buy stationery online.

4. Cards. Again, Smith’s may be more convenient if there isn’t a Clintons nearby.

5. Toys and games are always useful.

6. Impulse buys like drinks and snacks will always sell.

Hospitality

Movers and shakers: a history of Burger King in the UK

June 4, 2014 T Farrell Leave a comment

Burger King is one of the largest fast food chains in Britain. Burger King entered the UK market in 1974 but struggled to develop scale until it was acquired by Grand Metropolitan in 1989. Grand Metropolitan purchased the Wimpy hamburger chain and converted its outlets to the Burger King fascia. Later expansion came when Granada began to convert its roadside Little Chef branches to Burger King from 1996.

Early expansion in the UK
Burger King was established in Florida in 1953. Burger King was the third-largest fast food chain in the world by the 1970s, behind only McDonald’s and Kentucky Fried Chicken.

McDonald’s had entered the British market in 1974 and Burger King soon followed, with its first outlet established on Coventry Street in central London from 1976.

Burger King planned to aim at a higher quality market than McDonald’s. Its range of products included the Whopper burger as well as fries, milkshakes and apple pies.

Burger King established its first restaurant outside London in Reading, Berkshire, in 1982, to take its total number of outlets to nine.

One of the earliest franchisees was Management Agency and Music, a record company co-owned by singers Tom Jones and Engelbert Humperdinck.

Embed from Getty Images

Burger King UK suffered from heavy losses in its early stages. The European operations headquarters were relocated from Zurich in Switzerland to London in 1983.

Expansion continued at a slow but steady rate: there were 14 outlets, including three drive-through locations, by 1987.

Burger King acquired eight Quick hamburger sites from Whitbread for around £7 million in 1988.

Wimpy acquisition and further expansion
Like many of the American fast food chains, Burger King struggled to succeed in the UK until it found a British partner. Burger King’s American parent company was acquired by the London-based hospitality company Grand Metropolitan in 1989.

Grand Metropolitan acquired the British-based Wimpy Hamburger business, and converted 150 counter-service Wimpy outlets to the Burger King fascia. With 180 outlets, Burger King now had scale in Britain, which offered significant economies for the business.

Burger King offered faster service, a wider product range, and better training for staff than Wimpy.

Burger King had 250 restaurants across Britain by 1994. New sites were developed at out of town locations.

Roadside services operator Granada introduced Burger King branches at its 24 sites in 1995. Granada discovered that converting a Little Chef into a Burger King had the potential to double sales.

Burger King had 465 outlets in the UK by 1997. The company held 15 percent of the British burger restaurant market by 1999. Following this period of expansion, the chain was to effectively stagnate for the next twenty years.

Burger King was implied in the horsemeat scandal of 2013, when its own investigation revealed that “trace amounts” of horse DNA were discovered in meat from its supplier in Ireland. The company immediately terminated its contract with the supplier.

Bridgepoint and Caspian Group acquired Burger King UK in 2017.

There are 530 Burger King outlets in the UK in 2021, with the vast majority operated by franchisees.

Burger King UK announced plans to list on the London Stock Exchange with a value of £600 million in 2021.

Whisky

Rare pleasure: a history of J&B whisky

May 12, 2014 T Farrell Leave a comment

How did J&B Rare become the fifth highest-selling spirit in the world?

J&B Rare is introduced to the United States
Long-established London wine merchants Justerini & Brooks introduced J&B Rare, a blended Scotch whisky, from 1936.

J&B Rare was conceived of as an export brand. Its straw-gold body, and light, smooth, delicate character was designed to appeal to the American taste for rye whiskey. It is made with up to 50 percent single malt whisky, including Knockando, Auchroisk, Strathmill and Glen Spey.

Charles Guttman (1893 – 1969) of the Paddington Corporation was appointed as the United States distributor, and he initially established the brand in the New York City area.

Justerini & Brooks merged with Twiss, Brownings & Hallowes to form United Wine Traders in 1952.

Abe Rosenberg (1908 – 1985) became a partner in the Paddington Corporation from the mid-1950s. He began to expand J&B Rare distribution outside of its New York City heartland into the wider United States. 70,000 cases of J&B Rare were sold in 1954.

J&B Rare would compete fiercely with Cutty Sark, another Scotch whisky tailored for the American market which had been introduced by Berry Brothers, wine merchants of London, in 1923.

Justerini & Brooks refused to bolster sales by price-cutting, and J&B Rare was the most expensive non-aged Scotch whisky on the market.

Sales grew quickly as J&B Rare benefited from a shift in American tastes away from heavier Scotch whiskies such as Black & White and Ballantine’s, towards lighter blends. 700,000 cases of J&B Rare were sold in the United States in 1961, and it was the leading Scotch whisky in the New York City area.

International Vintners & Distillers
United Wine Traders merged with Gilbeys to become International Vintners & Distillers (IDV) from 1962. Gilbeys’ strong international distribution network helped to establish J&B Rare in Australia, New Zealand, Canada, South Africa and Ireland.

J&B Rare became the highest-selling Scotch whisky in the United States, with one million cases exported in 1962. The New York City area remained the heartland of the product. The brand remained virtually unknown in its native Britain.

Two million cases of J&B Rare were exported to America in 1967. J&B Rare was exported to 84 countries.

2.7 million cases of J&B Rare were sold in 1971, accounting for a substantial 55 percent of IDV profits.

Grand Metropolitan
IDV was acquired by Grand Metropolitan in 1972.

J&B Rare was the seventh highest-selling spirit in the United States by 1974, and the bestselling Scotch.

Rising sales of J&B Rare helped to render Grand Metropolitan the second largest distiller of branded Scotch whisky in the world by 1977. J&B Rare held ten percent of the global Scotch whisky market. Justerini & Brooks were awarded with a Queen’s Award for Export Achievement in 1978.

A push for sales outside the United States was a success, and J&B Rare was the second highest-selling Scotch whisky in the world by the mid-1980s.

J&B Rare was the fifth highest-selling spirit in the world by 1993.

J&B Rare was the tenth highest-selling Scotch whisky in the world in 2021. Its key markets are Southern Europe, South Africa and the United States.

Food

How to make Lea & Perrins Worcestershire sauce

April 17, 2014 T Farrell Leave a comment

How do Lea & Perrins make Worcestershire sauce?

Lea & Perrins Worcestershire Sauce recipe

Make your pickling liquor with 18kg of malt vinegar and add acetic acid or spirit vinegar until an acidity level of 6.12 percent is reached.
Take 9kg unpeeled heads of garlic and 18kg of unpeeled shallots (9kg of unpeeled red onions will suffice as a substitute for the shallots) and add to the pickle liquor. Allow the vegetables to age for at least a year until soft.
Meanwhile cure 11kg of Spanish anchovies in salt. Allow the anchovies to cure for at least three years.
When ready, mix together your pickles with 82 litres of malt vinegar (or walnut ketchup for historical accuracy). Add 6.4kg of black tamarind paste from Bengal. Add the anchovies. Then add 15kg of raw sugar and 4.5kg of salt. This is followed by 2.3kg green cayenne peppers from Fujian in China (preferably small and hot), 1kg cloves from Southeast Asia or Zanzibar, ginger, mace and 225ml essence of lemon.
Blend together and allow to ferment for a minimum of six weeks. Stir occasionally.
Add molasses to achieve the desired colour, and water to get to the desired consistency.
Finally, filter the sauce and then pasteurise for two minutes.

Always use the finest ingredients you can source. Mike Page, the Lea & Perrins technical manager, argues that the sauce will continue to age and improve in the bottle.

The original recipe called for 36 litres of soy sauce. It was replaced by hydrolysed vegetable protein from the Second World War but appears to no longer be used.

Leisure

Jaguar ‘British Villains’ ad

April 15, 2014 T Farrell Leave a comment

Have you seen the new Jaguar ‘British Villains” ad? I first caught it on YouTube, then they showed it on Top Gear, and more recently I’ve seen it airing in UK cinemas.

I like the ad. It’s distinctive and has a lot of character, which I think has much to do with the actors hired by Jaguar: Ben Kingsley, Mark Strong and Tom Hiddleston. The three actors cover a lots of ground: Kingsley is an Academy Award-winning septuagenarian, Strong is a rising middle aged actor who is known for playing villains, and Hiddleston is a rising star, best known for playing Loki in the Thor superhero films. By covering three generations, Jaguar broadens its potential appeal. The inclusion of Hiddleston encourages individuals in their 20s and 30s to aspire to own a Jaguar, even if they can’t afford one yet.

The high calibre of acting talent associates the Jaguar brand with quality and refinement. It does this while avoiding the pitfall of seeming stuffy. This is because mainstream Hollywood actors give the ad accessibility and a contemporary feel. The ad also utilises humour, which is fairly unusual and thus distinctive for a sports car ad.

The actors and the London setting firmly establish Jaguar’s British provenance. The ad also attempts to associate itself with the kudos of the James Bond movies: a high speed chase involving sports cars, helicopters and planes, the tuxedos, the camp villains. This is Bond association on the sly, as not many viewers will realise that movie Bond has never driven a Jaguar.

The ad is of course very masculine, which makes sense, as most Jaguar drivers are probably men.

The tagline “It’s good to be bad” is fairly clever as well, as it acknowledges that a sport car is a kind of guilty pleasure, a frivolous, un-necessary purchase.

All in all, a decent ad from a brand that has suffered from a lack of a strong brand image.

Tea

The rise of Yorkshire Tea

March 21, 2014 T Farrell Leave a comment

Yorkshire Tea is the second highest-selling tea in Britain, with a 23 percent market share as of 2017.

Historically the leading tea brands in Britain have all been owned by large, wealthy corporations. It was argued that these companies had an advantage over small regional concerns due to marketing, distribution and technical expertise, as well as cost-scale efficiencies.

Many people would struggle to differentiate between Tetley, PG Tips and Typhoo in a blind taste testing. Twinings is different from the more mainstream three, as it is a more premium product.

Launched in 1977, Yorkshire Tea is a basic but strong black tea. It is a blend of Kenyan, Rwandan and Assam leaves. In taste and aroma it is of higher quality than Tetley, PG Tips and Typhoo, but inferior to Twinings. On price, it broadly matches PG Tips. So how did the family owned Yorkshire Tea brand rise to fourth place in a UK tea market dominated by large companies? Here are my ideas:

Value: the product offered quality at a moderate cost. Due to this, it rapidly established a cult following.
Technical innovation: the owner, Taylors of Harrogate, distributed slightly different blends in each UK region, in order to best suit the local water supply. (This ceased in 2000 when a Hard Water version was launched).
Branding: the packaging of the product evoked imagery of old rural Yorkshire. It tied in to a desire for provenance, and smaller-scale craft production. The slogan on the box, “Let’s have a proper brew” suggests authenticity due to the product’s local-ness and smaller scale production. It also indicates that its competitors do not offer this. Also the name, “Yorkshire Tea” is no-nonsense and straight forward.
Advertising: The brand was not advertised on television until 1997, when it sponsored Heartbeat. The association was canny: Heartbeat was a programme that was strongly associated with rural Yorkshire.
Marketing: The tea was offered for free to branches of the Women’s Institute until 2011. This gave women (who usually do the grocery shopping) a chance to taste the product.

The Grocer also suggest that Yorkshire Tea has a “stronger taste profile” than its competitors.

By 1994, five million cups of Yorkshire Tea were drunk each day. By 2001 this had grown to nine million cups. The brand had sales of £46.1 million in 2010. Value sales grew an impressive 66 percent between 2009 and 2014.

Food, Hospitality

The hole story: a history of Dunkin’ Donuts in Britain

March 20, 2014 T Farrell Leave a comment

Dunkin’ Donuts has failed in the British market twice. Will it succeed on its third attempt?

1965 – 1968
Dunkin’ Donuts announced plans to establish a chain of 250 shops across Britain in 1965. The first outlet was opened at Ludgate Circus, London in October 1965. The venture was a “flop” according to The Economist, and the operation entered into liquidation in 1968.

1988 – 1999
The second attempt began in 1988. Somewhat frivolously, its British head office was at 48 Carnaby Street, London. Four outlets were opened in the Birmingham area, with a bakery at Leamington Spa. Six Dunkin’ Donuts (including a 24-hour branch in Glasgow) and a bakery in Livingston were established in Scotland. The plan was to open 100 outlets, with a focus on the London area. The outlets and bakeries were all closed down in 1999, after continuously losing money.

During its second attempt, Dunkin’ Donuts was actually owned by a British company, Allied Domecq, which has substantial knowledge of the local property and catering markets, as the owner of J Lyons (including the Wimpy burger chain) and 3,500 pubs.

2013 to present
Dunkin’ Donuts returned to Britain in 2013. Management may have been encouraged by the success of rival doughnut retailer Krispy Kreme. The chairman and chief executive of Dunkin’ Donuts in America is also a Brit. But Krispy Kreme clearly presents itself as a premium priced “treat”, whereas the Dunkin’ Donuts model is more of a value proposition akin to Greggs.

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