SHS turnover tops £80m as its sales continue to grow

 

TWENTY years ago Jo Sloan and Geoff Salters were working with Bord Bainne in Belfast when they spotted a advertisement seeking Northern Ireland agents for Colgate Palmolive.

The two men answered the ad, landed the contract, and have built the resulting business SHS into a food brokerage company that will have a turnover of £80 million this year.

SHS is now Ireland's largest food sales, marketing and distribution company with offices in Belfast, Dublin and Cheltenham. The company is currently expanding rapidly - sales have increased by 50 per cent in the last 18 months - and plans further growth for this year. Turnover was about £62 million last year, and the company operates on margins of between 1.5 per cent and 2 per cent, according to Mr Sloan.

Last week SHS announced that it was merging its Dublin warehousing and distribution operation with the Clondalkin based New Age Beverages. According to Mr Sloan, the merger has accelerated the company's expansion plans in the Republic by two years.

Instead of building up its own sales and marketing team, SHS has acquired the staff of New Age Beverages, which is responsible for brands such as Tropicana, the Cott Corporation's Virgin Cola, and St Bernard Cola.

But Mr Sloan has no intention of sitting still as he is already talking to other possible merger of acquisition targets. The consideration involved in the merger has not been disclosed but in such cases SHS normally retains the existing management, and pays the company with a mix of cash and redeemable shares in the main SHS company.

Over the past two decades the SHS business has been transformed for pure distribution to encompass sales and marketing, which is carried out on behalf of clients. In the North it represents major brands such as Dolmio, Uncle Bens, and also introduced Danepak bacon eight years ago.

In Britain, SHS represents many Northern Ireland food companies including tlie North's leading tea brand Punjana, and Tayto NI. It has long established links with the major British supermarket chains and handles all the distribution sales and marketing for companies such as Tayto NI and Punjana.

Aside from his desire to expand SHS's business in the Republic, Mr Sloan is also looking for small and medium sized food companies that are interested in selling into Britain but who do not have resources, or skills to undertake the project.

Mr Sloan said the type of products he is looking could be sold either under their own Irish brand name or as a private brand for one of the major supermarket multiples. He is also interested in niche food companies such as farmhouse cheeses. "There are a lot of niche markets and we have an in depth knowledge in a wide range of areas," Mr Sloan said.

SHS gives advice on quality, branding, and packaging for the British market, and can them use its Cheltenham office to organise sales, marketing and distribution in Britain. If the company comes to an agreement with a manufacturer, SHS will either take a percentage of the British sales or a flat management fee for handling the business.

Occasionally it will also take an equity stake in the manufacturing companies but has a general policy of "sticking to what we know" which is the core sales, marketing and distribution business.

However, Mr Sloan and his partner, Mr Salter, recently broke their own rules by acquiring the Scottish based mineral water company Caledonian Clear. SHS represented the fledgling mineral water company in Britain and sales were growing rapidly.

But Caledonian Clear was a very young business and its owner had only short term credit facilities for buying essential raw materials such as bottles and labels. He asked SHS to take a stake in Caledonia Clear, and the initial 75 per cent shareholding subsequently grew to full ownership.

Caledonian Clear, which produces a range of flavoured mineral waters had sales of £10 million this year, but according to Mr Sloan turnover will grow to between £15 million and £17 million this year.