Farmbake signs €2m deal with Tesco
Small Business: FutureProof - Farmbake
Alan and Jim Divney’s business has just signed a €2 million deal with Tesco
The deep and protracted recession of the 80s was hardly a good time to start a new business, but father and son Jim and Alan Divney did it anyway, establishing their cake distribution business in 1987 with just one second-hand van.
Today, Farmbake is a €10 million turnover company with a fleet of 22 trucks, a staff of 32 people and almost 2,500 customers nationwide – including Tesco, which Farmbake has just signed a €2 million deal with.
“Having decided on distribution as our sector, it was then a question of what to distribute,” says managing director Alan Divney. “They were tough times and money was tight but we noticed that people were still buying cakes as treats.
“We approached two bakeries in Kildare and began buying from them and distributing locally with the emphasis on quality at an affordable price. That proposition is still at the heart of what we do today.”
The Farmbake brand was born in 1988 and roughly 60 per cent of the company’s sales are under its own label. Almost all of the 40 year round and 30 seasonal products in the Farmbake range are made in Ireland by 11 different bakeries.
“I think there are three main reasons for our survival and consistent growth,” Divney says. “We give the customer what they want at a price point that suits them, we provide the bakeries with consistent business and a reliable route to market and we provide the retailers with a very wide range of products that cover all of their confectionery needs in one go.”
Initially, Farmbake was mainly supplying small independent grocery shops. Its first breakthrough into the symbol stores came in 1990 when it began supplying Spar outlets. Since then it has added a long list of others including Londis, Mace, Gala, Daybreak, Costcutter and Topaz.
Divney says there is no fast way to grow a business like Farmbake. “You do it steadily over time by knocking on doors, building your reputation for service and not being afraid to keep knocking until a door opens. I still spend around 80 per cent of my time on the road visiting customers and potential customers,” he says.
“What marks us out as different is our distribution reach (which certainly helped us win external business from the likes of Mr Kipling) and the fact that we try to run things like clockwork, arriving on time all the time to our customers.”
“We have invested heavily in IT to support the streamlining of the distribution process and all of our drivers have hand-held units that co-ordinate stock control, inventory, delivery dockets and invoicing. Four years ago we spent €1.6 million on new purpose-built facilities in Naas and we also have depots in Cork, Galway and Sligo.”
Farmbake has continued to grow during the recession taking on new customers and responding to changes in consumer buying patterns. Divney estimates growth at the company at about 30 per cent over the last three years.
“We have used in-store promotions a lot to help maintain volume.
“We have also been conscious of keeping prices at a point customers are comfortable with which is around €2. Our volumes have gone up faster than our revenue but we will never break our golden rule, which always puts quality before price. Once you break that rule you start destroying your brand.”
Divney says that while Irish consumers still love their sweet treats consumption patterns are changing. “There has been noticeable growth in novelty cakes for special occasions such as St Patrick’s Day and Halloween. Seasonal products now account for upwards of 20 per cent of our cake portfolio sales.”