Hazlewood Foods Plc.

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Hazlewood Foods Plc.

Rowditch
Derby DEI 1NB
United Kingdom
Telephone: ( + 44) 1332 295295
Fax: ( + 44) 1332292300
Web site: http://www.hazlewoodfoods.com

Public Company
Incorporated: 1900 as Hazlewood (Products) Ltd.
Employees: 11,000
Sales: £788.9 million (US$1.27 billion) (1999)
Stock Exchanges: London
Ticker Symbol: HZLE.L
NAIC: 311412 Frozen Specialty Food Manufacturing; 3119999 All Other Miscellaneous Food Manufacturing; 42241 General Line Grocery Wholesalers; 111419 Herb Farming; 422490 Sandwiches Wholesaling

Hazlewood Foods pic is one of Europe’s leading producers of convenience foods, including frozen foods and other ready-to-eat food products. With 51 production facilities in the United Kingdom and Europe, many in the Netherlands, Hazlewood has captured a leading share in most of its product categories. Hazlewood leads the U.K. market as producer of chilled and frozen prepared foods and is the world’s leading producer of sandwiches to the third-party market. In addition, Hazlewood’s greenhouse horticulture production facilities place it as the world leader in hothouse tomatoes and fresh herbs. The company has achieved strong growth and profits by concentrating on product categories that provide the strongest growth potential, including sandwiches; ready meals and other convenience meals such as pizza and quiche; snack foods; recipe sauces; specialized fresh produce, including cherry and vine tomatoes; and celebration cakes. Hazlewood does not manufacture any products under its own brand names. Instead, the company acts as a major private label supplier to third-party retailers, including the top five U.K. supermarket retailers, as well as retailers in continental Europe. The United Kingdom and Ireland generate 86 percent of the company’s sales, while the Netherlands generates seven percent. Hazlewood Foods is led by Chairman Peter Barr and co-CEOs John Simon (in the United Kingdom) and Tom van Gurp (in continental Europe).

Saucy Start at the Turn of the 20th Century

Hazlewood Foods originated at the turn of the century as a manufacturer of sauces. Founded by brothers Arthur and William Hazlewood, with backing from their families, the company’s first facility was located in Helper, in Derbyshire. The company’s sauces found a ready market in the British kitchen. One Hazlewood brand in particular, Beetop Sauce, remained a company staple until well into the 1980s, when it was discontinued.

By the 1930s the company had grown sufficiently to take a listing on the London Stock Exchange under the name Hazlewood (Products) Ltd. The company’s catalog had grown to include pickles and vinegar production. Hazlewood moved to expanded facilities in Rowditch, Derby, where it maintained its headquarters through the end of the century. During the 1930s, Hazlewood placed an increasing emphasis on self-sufficiency. In 1937 the company added its own glassworks, as well as a printing and labeling machine, enabling the company to control the entire production and packaging process with the single exception of the caps for the bottles. This early vertical integration not only helped the company weather the lean Depression years, but also face up to the years of World War II, when rationing and supply shortages forced many of its competitors out of business.

By the end of the 1960s, however, Hazlewood’s best years seemed to be behind it. While its products continued to find distribution in the Midlands, Lancashire, and Yorkshire regions, the company was not growing beyond these boundaries, and by the early 1970s, failure threatened.

In 1973, Peter Barr, then 31 years old, was hired as the company’s managing director. Barr had previously been a director of a supermarket chain, Fine Fare, which later changed its name to Somerfield and grew to become one of the top five supermarket chains in the United Kingdom, as well as a top Hazlewood customer. Barr was given a simple mission: turn Hazlewood’s fortunes around in just ten weeks, or else the company would be closed down altogether. Barr not only met this challenge, but transformed Hazlewood into a leading U.K. food products supplier.

Cooking up Success in the 1980s

Barr dramatically restructured the company’s manufacturing processes and introduced a wide variety of new products, working to modernize Hazlewood in the face of a radically changing supermarket landscape. The rise of the large, self-service supermarket had begun to change the way people shopped; at the same time, people began to rely increasingly on ready-made convenience foods, opening new markets to producers such as Hazlewood.

Barr was ready to take the company to the next level. In the mid-1970s, he set up a so-called “reverse takeover,” in which Hazlewood was acquired by two food producers in the north of England: The Beetroot Company, which had been a major supplier to the Tesco supermarket giant, and Humber Pickle, based in Hull. The new company continued to operate under the Hazlewood name and retained its public status. Meanwhile, the founders of both The Beetroot Company and Humber Pickle remained with the company and were named to the executive board. In its next phase of growth, Hazlewood made a practice of retaining the management of companies it acquired.

Hazlewood quickly began an aggressive growth-by-acquisition drive that lasted into the late 1980s and placed the company among the United Kingdom’s top three publicly listed growth companies for much of the period. For most of the decade, Hazlewood’s growth rate for both revenues and profits exceeded 30 percent per year. In 1979 the company acquired Manor Vinegar Company, which brought future CEO John Simons to Hazlewood’s management team. In 1984 Hazlewood purchased its first company in the Netherlands, which brought in future CEO Tom van Gurp and initiated a focus on the Dutch market. Other acquisitions added such product categories as meats, fish, horticulture, confectionery, and chilled and frozen foods. Most of these acquisitions were funded through exchanges of Hazlewood stock, providing a low-cost entry into these new markets. The company’s insistence on retaining the existing management at its new acquisitions enabled production to remain steady.

As Hazlewood phased out its own-brand production, its emphasis turned more and more to supplying the rapidly consolidating supermarket field. The shakeout of the food retailing industry eventually concentrated much of the retail food markets into the hands of just five retailers-Tesco, ASDA, Safeway, Somerfield, and J. Sainsbury. As part of this movement, the supermarket industry’s leaders increasingly began to challenge the name brand foods market with their own private label brands. Hazlewood had by then positioned itself as a primary supplier of private label foods and other products, just as the major retailers began seeking to expand their own private label sales. Launched initially as lower-priced “generic” alternatives to the major brands, private label brands became increasingly sophisticated during the 1980s and 1990s, rivaling the name brands in quality while remaining competitive in price. This trend enabled Hazlewood to achieve sustained growth throughout the decade.

During the late 1980s, Hazlewood also began to step up its acquisitions on the European continent, focusing its growth especially on the Netherlands. In 1989 the company acquired two Dutch companies, Advang Groep and Diepvries Monnickendam. Other European acquisitions included those of Evers Specials, Gebr. Hansen, Gebr. Sterk, Vishandel Gebr. Van der Veen, and Wafel Janssen, in the Netherlands; Feldhues Fleischwarenbetriebe in Germany; and Hectare Agro Industria in Portugal. By 1990, the company’s European expansion had become significant enough to create a chief executive position for its Continental Europe activities, a position that was given to Tom van Gurp. Acquisitions of FH Lee Limited and Maharry Holdings brought the company into the paper goods and feminine hygiene products markets.

Regrouping in the 1990s

Hazlewood’s rapid expansion gave it the critical mass to weather the deep recession of the late 1980s that crippled the British economy. Nonetheless, the company was forced to slow its growth, cutting back on acquisitions before embarking on a restructuring in the mid-1990s. As part of its regrouping, Hazlewood moved to exit a number of markets where it would otherwise be forced to make heavy investments in order to achieve a leadership position or where the high cost of commodities cut too heavily into profit margins. Hazlewood sought to concentrate on its core markets, particularly those with the highest profitability.

This regrouping led Hazlewood to exit such markets as fruit juices, shellfish, confectionery, and other markets. At the same time, Hazlewood turned its focus to increasing its share of the convenience foods sector, one of the fastest-growing markets in the retail food industry. These food categories included a number of Hazlewood mainstays, such as sauces, sandwiches, pizza, and frozen meals. As part of its new focus, Hazlewood engaged in a massive investment drive, increasing plant capacity while strengthening its operations with new strategic acquisitions. John Simon, who was named CEO for the company’s U.K. operations, took on the task of redirecting the company’s growth.

Company Perspectives:

Hazlewood Foods is, or has a clear objective to be, market leader in a selected range of key convenience food categories. These categories, which Hazlewood Foods calls its “drive” categories, are rapidly growing markets and ones in which the Group can significantly increase its market share and for which it often acts as category manager. Hazlewood Foods’ “drive” categories, which now account for 78 percent of turnover, are: ready meals; sandwiches; chilled pizza; quiche; recipe sauces; snacks; cakes & desserts; delicatessen; glasshouse horticulture.

By the late 1990s, Hazlewood had firmly established itself as market leader in a number of key categories, including readymade sandwiches—the company had become the world’s largest sandwich maker—and greenhouse horticulture products, especially potted herbs. The company’s greenhouse operations expanded to become the largest in the world. The company opened its own greenfield mineral water production site in Campsie, Scotland, and became one of the largest bottled water producers in the United Kingdom. The company also built two new state-of-the-art ready-meal production plants in Warring-ton and Wrexham. By the late 1990s, the company had built a manufacturing network of more than 51 plants across Europe, with a total workforce of more than 11,000.

In the late 1990s, the company began to consolidate its leadership positions, especially its position in the sandwich market, with a new string of acquisitions. These included the 1997 acquisitions of The Sandwich Man in Germany and the 1998 acquisition of U.K. sandwich maker Breadwinner Foods. Hazlewood also boosted its frozen foods capacity, acquiring the R&B Group in 1997, while rolling out a line of frozen entrees, Rhodes to Home, featuring recipes created by famed chef Gary Rhodes. Meanwhile, Hazlewood continued to work closely with its major supermarket clients, designing new and more sophisticated prepared meals, with an increasing target on the upscale foods market. In 1999 the company unveiled a new generation of convenience foods for the J. Sainsbury supermarket chain, featuring all the ingredients a customer needed to prepare a given recipe. As it approached its 100th anniversary, Hazlewood’s keen attention to the food market and its willingness to adapt itself to the retailing industry’s major trends made it a likely industry leader in the 21st century.

Principal Subsidiaries

Advang Groep BV (Netherlands); Breadwinner Foods Ltd.; Diepvries Monnickendam BV (Netherlands); Evers Specials BV (Netherlands); Feldhues Fleischwarenbetriebe GmbH (Germany); FH Lee Ltd.; Gebr. Hansen Beheer BV (Netherlands); Gebr. Sterk Beheer BV (Netherlands); Hazlewood Convenience Group I Ltd.; Hazlewood Convenience Food Group Ltd.; Hazlewood Europe BV (Netherlands); Hazlewood Frozen Products Ltd.; Hazlewood Grocery Ltd.; Hazlewood Holdings GmbH (Germany); Hazlewood International Ltd.; Hazlewood Delicatessen and Meat Group (U.K.) Ltd.; Hazlewood Product Ltd.; Hectare Agro Industria SA (Portugal); Henri van de Bilt Beheer BV (Netherlands); Maharry Holdings (Ireland); R&B Group Ltd.; The Sandwich Man GmbH (Germany); Vishandel Gebr. van der Veen BV (Netherlands); Wafel Janssen BV (Netherlands).

Principal Competitors

Albert Fisher Group; Nestlé; Groupe Danone; Northern Foods; Geest; Unigate; Hibernia Foods; Unilever SA; Hillsdown Holdings; United Biscuits.

Key Dates:

1900:: Hazle wood is founded.
1937:: Company brings all aspects of the production process inhouse.
1960s:: Hazlewood enters a slump.
1973:: Peter Barr joins company as managing director, beginning turnaround and initiating a period of dramatic growth.
1980s:: Company is positioned as a leading supplier of private label brands.
1990s:: CEO John Simon directs focus toward most profitable product lines and drops others.