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June 2005

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Winning the ice cream wars

James Lambert has led Richmond foods to dizzying success. Not content with overtaking Walls in supermarket take-home sales this year, Lambert is now looking to take on Europe. Sarah Hone meets the ice cream man with big plans. PICTURES BY IAN MEESON

"This is a fun business to be in," announces James Lambert. There is more than a hint of a twinkle in Lambert's blue eyes which match the blue hairnet the North Yorkshire ice cream impresario is wearing to whisk me round the hi-tech Richmond Foods ice cream factory at Leeming Bar, barely a cornet's throw from the A1.
In fact we are all wearing blue hairnets - the PR man, the photographer, Lambert and me, along with hard hats, white coats and sterile wellies. Fun? Perhaps only a hint of a smirk, but certainly a symptom of how properly everything is done here at Richmond Foods. It's quite clear no one gets to see the inside of Lambert's domain without donning the regulation blue and white health and safety gear.
Lambert leads us around the factory at a brisk pace. There is an energy and dynamism too about this great and complex ice cream production unit that churns out 4 million litres of ice cream a week in tubs and another 150 million ice cream cones, making it Europe's largest ice cream factory.
Its complex pipework, highly automated and efficient production processes and super fast production lines also make it unique in the world, Lambert assures me, as he pauses to scoop up an armful of unruly cornets that have escaped from the conveyor belt carrying a new batch of cones for Richmond's new low-fat Skinny Cow range.
Two litre tubs of Somerfield own-brand vanilla are whizzing down the next production line and the air is permeated by the evocative aroma of hot sugar and vanilla. Everywhere we look there are other own label tubs in various stages of production.
Making lots of ice cream, fast, and cheaply, is what Richmond now does better than anyone else, so much so that it overtook market leader, Unilever's Walls, in supermarket take-home sales at the end of last year.
Richmond has become one of the stock market's fastest growing food companies, outperforming global giants and serving all the main supermarkets with own-brand products.
Lambert's route to heading one of Europe's most successful food companies was a circuitous one. His first job, fresh from Cirencester Agricultural College, was selling bull semen to cattle breeders. He was rather good at it too, so much so that he was made managing director of Herdwise by owner Jonathan Ropner, despite being the youngest employee in the company by ten years.
"I was having to manage people a lot older and much wiser than me," he says. But with "a bit of enthusiasm, lots of passion, an idea of what would make a company win and what doesn't," Herdwise became the largest private cattle breeding organisation in the UK. "We sold it in '96."
Earlier on in 1985 Ropner, a Yorkshire farmer, businessman and the brains behind Dalepak, had bought Cardosi, a local ice cream maker. Later he approached his friend Lambert to join him in the ice cream business, to be renamed Richmond. Lambert put £340,000 into a firm that had yearly sales of less than £3250,000 and employed just four people.
"We went into ice cream originally because milk quotas had come in, but milk that was going to be turned into ice cream would be exempt from the quotas," he says.
"We also thought it would be a fun food business to go into," he adds, the twinkle returning to his eye.
"It was the blind leading the blind to begin with," he admits, gleefully. "We didn't really know what to do and had never worked with supermarkets before but somehow we knew we had to try and work a business where there were one or two advantages for the company that customers would want."
Lambert and Ropner decided to go for size and volume. Deliberately steering away from local creameries that supplied niche markets, Richmond began by making 2 litre containers of vegetable fat-based, low-priced ice cream, with the aim of wooing the supermarkets.
"We knew had we had to get stuck into the supermarkets because that's where millions of people a week do their shopping," he says.
When probed on the subject of his unfailing business sense, Lambert identifies fear of failure as one of his biggest drivers. "Having lateral thinking and trying to understand what really matters in a business is quite handy and it's not given to everybody," he says. "But it's a lot easier to manage a business that's winning and you can have a lot more fun with it, rather than fire fighting with something that's not working. So for me the most important thing is to keep Richmond winning."
To Lambert's credit he has kept Richmond winning year after year. Profits rose by 34 per cent to £314m last year and the group has bagged a 39.9 per cent volume share of the £3575.4m take-home market, employing some 950 staff across three sites. And this in a market where prices are declining and consumers expect to pay less and less for what they eat. "The 2 litre ice cream packs that we used to sell for £31.85 now bring us 85p," he says.
It was Yorkshire supermarket Morrisons that first helped Lambert engender Richmond's winning streak. "They gave us our first major break," he says. "They had 44 stores at the time and wanted to deal with companies where Morrisons would be the biggest customer, so they knew they would get the new ideas and the best prices. We were young and local. They wanted to take on Asda at the time and didn't particularly want the same supplier base as their rival."
Lambert and Ropner's next move was to buy Windsor Creameries from North West business mogul Trevor Hemmings. In return for a £34.6m investment and Windsor Creameries, Hemmings got a tasty 40 per cent of Richmond.
A merger with Leeds-based iced lolly maker Treats followed in 1998. "Treats had 70 per cent of the own-label lolly market so that meant every single supermarket now had to deal with us because they couldn't get lollies from anyone else," Lambert says.
Perhaps Richmond's biggest coup was its acquisition of Nestl\x8e's ice cream business in 2001, which gave it the chance to make branded products such as Kit Kat and Smarties ice creams, big sellers both in supermarkets and in the impulse-buy market. Lambert takes up the tale of how, as a little-known Yorkshire ice cream maker, he pulled off the audacious feat.
"I thought we needed some branded business and I knew that Nestl\x8e were losing a lot of money with Lyons Maid when they bought it," he says. "I cheekily rang them up one day and said: 'If we take on your factory and shut it down' - it was an inefficient factory because it just wasn't big enough - 'can we make all your products for you?'"
Nestl\x8e declined the request but came back with an offer to Richmond to take the business over. "I couldn't believe it," Lambert says, "but it did make sense. Big companies don't remain big and strong if they run businesses that lose lots of money and they were losing a lot of money in the UK from their ice cream."
As part of the tie-in with Nestle, Richmond has launched its new Skinny Cow range of ice creams, aimed at the health-conscious consumer who shies away from more traditional, calorie-laden ice cream. Manufactured using a non-soluble fibre derived from chicory, also used in pro-biotic yoghurt drinks, Skinny Cow does a surprisingly convincing impression of the genuine article.
Although he admits it is largely aimed at women, Lambert insists Skinny Cow has also been a success with some of Richmond's male employees. "Quite a lot of the fit guys here at Richmond, who go to the gym a lot and would never dream of eating a normal ice cream, will go and pig out on a couple of Skinny Cows every so often," he says.
And creating new consumers is, mantains Lambert, one of the pillars of growth in the ice cream business. He announces proudly that, "20 per cent of customers who buy Skinny Cow do not buy ice cream." Lambert has big ambitions for Skinny Cow, which was successfully trialled in Asda last year and is being rolled out across supermarkets and corner shops this season. He is predicting sales of £37m for this year, spiralling to £315m annually by 2008 - a tenth of Richmond's total turnover.
After snapping up two more small ice cream companies followed by Wigan-based De Roma in 2004, next on Lambert's ambitious to-do list is a foray into continental Europe. Not, he hastens to add, that Richmond would presume to teach the Italians how to make ice cream, but northern European acquisitions are high on the agenda.
Lambert says the ice cream market in Europe is very similar to the UK situation a decade ago. The market is shared by small and regional players who have yet to show signs of consolidating, as well as the branded giants, Nestl\x8e and Unilever. Lambert is keen to find out if he can repeat the company's successful UK strategy of rationalisation on the continent.
"We're the largest ice cream manufacturer in the UK by miles, and within about another two years we'll have invested £360m in new kit here in the UK," he says. "We've rationalised the whole market, got high levels of product innovation and taken out as many costs as we possibly can.
"So in about three years' time we'll have finished UK ice cream. We'll keep renovating and innovating but it's not going to grow much more. Why not use that time to look at Europe and see what we can do there? By the end of those three years I hope to be in Europe."
Lambert reckons that although he might not be able to teach the Europeans much about making ice cream, Richmond could show them a thing or two about how to make it profitably. "I think that's what we've learned: not to invest in things that don't matter, like lorries and cold stores, only to automate where there is a payback."
In the meantime, however, Lambert's heart is in North Yorkshire, the area where he was born and bred and he says his biggest luxury is his ten-minute commute to work. "Personally, I want to be here in Yorkshire," he says, "but it's good for the business too. Seventy per cent of UK food manufacturing industry is within 50 miles of the M62 corridor, which means there are suppliers, engineers and knowledge up here - it's our natural home."
And does Lambert, the ice cream man with the Midas touch, actually like the product he works with every day? "I love ice cream, but the trouble with working here is keeping the tummy down," he says, patting his lean girth. "After all would you trust a thin ice cream man?"

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