Profile – Boyd wonder

The UK snack market is no couch potato. While other sectors in the Huber about the battle to win in the snack market. economy are issuing a rash of profit warnings, or fretting about the strong pound, the snack industry continues its robust growth, and is now worth #2.2bn.

As finance director of Golden Wonder, the UK’s third largest snack company, 35-year-old Steve Boyd is in the front line of an intensely competitive industry.

Golden Wonder, founded over 50 years ago by an Edinburgh baker, has an 18% share of the bagged snack market. KP McVities is the second biggest player with 21%, while the giant Pepsi-owned Walkers Snack Foods – enjoying a high profile thanks to the Gary Lineker ads – has a commanding lead with a 45% share.

In Golden Wonder’s Market Harborough head office, Boyd, a 6ft 4in Rhodesian, explains the contrary consumer behaviour driving the market. ‘People have a schizophrenic attitude when it comes to buying snacks,’ he says, in a still-clipped South African accent. ‘They’ll eat a bag of snacks because they’ve had a healthy breakfast and lunch.’

Boyd is keen to establish some basic product definitions, such as the difference between a crisp and a snack. A crisp is a sliced potato, and a snack is everything else. And in the UK, we consume more than other Europeans, except for the Dutch. ‘But this is still only half of US consumption,’ Boyd adds quickly.

Aside from the snack-crisp split, the market is divided into four areas: ‘power’ brands like Wotsits; branded crisps, (a smaller part of the market); own brand crisps for supermarkets; and emerging products tagged ‘adult crisps’, such as Pringles. Add to this the business psychology tag of ‘impulse buys’ – for garage forecourt purchases, for instance – and a surprisingly complex market is revealed.

Boyd’s route to Golden Wonder was through accountancy. Born in Northern Rhodesia, his family spent six years in England before returning to South Africa, where he lived for 18 years and qualified as an accountant in 1985.

He subsequently moved to England, joined Coopers & Lybrand and started working in financial services. In 1991, he transferred to Coopers’ Milton Keynes office and then moved to the Northampton office.

He found his vocation as a consultant specialising in the manufacturing sector. ‘I was getting stale in the accountancy profession,’ he recalls, ‘but I became interested in manufacturing clients like Carlsberg.’

Boyd first came into contact with Golden Wonder when he acted as a financial consultant to the company during its MBO in 1995. It was his big break. Within six months, he was appointed FD and a company stockholder. ‘Management consulting gave me an inside track to Golden Wonder,’ acknowledges Boyd.

At the time, Golden Wonder was on the ropes. Dalgety, the giant food producer, had bought the company from Hanson, the high-profile UK conglomerate. Hanson had sold off the Pot Noodle business and the company’s sales were going backwards at a time when the market was expanding. Golden Wonder’s chief executive, Clive Sharpe, decided to attempt an MBO and assembled a team of six.

A ‘decision support’ provider

According to Boyd, the company was an ideal candidate for an MBO. ‘It had a For Sale banner for quite a few years before the buyout,’ he says. But he paints a daunting picture of the task which faced them. ‘Our sales force had been decimated and our competitors didn’t expect us to be around within a year,’ he recalls.

Undeterred, the team concentrated on classic rescue measures – cutting costs, overheads and tightening working capital.

Some of the most important business improvements centre on production.

Corby’s single production line consumes 50,000 tonnes of potatoes a year.

The company used to buy a single variety of potato and store them. Now it draws on five or six different varieties to maintain freshness, while at the same time halving the number of suppliers to three.

Recalling the early days of the MBO, Boyd says: ‘Our product only lasts 12 weeks and we had tonnes of the product sitting around. It was a really inefficient way of manufacturing and distributing.’ The distribution process has been duly speeded up. The aim is for consumers to eat the product within three to four weeks instead of eight.

Discussing his role as FD, Boyd is keen to deflect any glory back to the finance department that supports him. Amazingly, before the MBO there were no qualified accountants in the Market Harborough site, leaving a convenient gap for Boyd to fill.

‘I brought a financial accountant’s mind to Golden Wonder for things like fair value and cash flow. The company couldn’t produce quality decision-support information,’ he says.

Much has changed at the snack company since then. There are now two financial and commercial accountants in the finance department, which has been fully integrated with marketing and sales. ‘The finance department is no longer a standalone department,’ says Boyd. ‘The accountants set the parameters for the way the business operates and the financial function would continue without me.’

Boyd defines his role as decision support. But the decisions he is talking about include multimillion-pound strategic judgements – such as whether to green light national marketing campaigns. Ask about his typical day, and you get the impression that Boyd resents being at his desk, wading through the telephone messages and emails.

He pays regular visits to the City, sizing up opinion on a possible flotation, and spends a lot of time visiting the three manufacturing factories – the nearest is in Corby, ten miles away. ‘I spend my time worrying about market trends and costs, he says.

Arch-rival Walkers – ‘US and very aggressive’ – has a factory in nearby Leicester. But Boyd is bullish about the Pepsi-owned competition. For some reason, the snack market is growing faster than the longer-established crisp market, and Golden Wonder sees this emerging market as a priority.

‘If we went head to head with Walkers over crisps we would lose in England and Wales. But we can win in the snack market. Can you name any Walkers snacks?’ Boyd also believes Golden Wonder is at an advantage because it supplies own-brand crisps to supermarkets, unlike Walkers.

Go-ahead snack attitude

As Boyd admits, a lot of market share rests on brand recognition. Golden Wonder and Wotsits have a 98% market recognition in the UK. ‘The brand value stretches beyond our crisps,’ he insists, which suggests that Golden Wonder is well placed to offer more products. ‘When you hear the name Golden Wonder, what do you think of? The word ‘golden’ suggests healthy products.’

The emergence of low-fat, ‘healthy crisps’, for so long a contradiction in terms, marks an important area for future growth. Sales of Walkers Lites, launched after the first Golden Wonder diet crisp, have more than doubled. KP McVities is also keen to muscle in on the low-fat market, with the recent launch of its Go-Ahead Potato Bakes, in TV ads fronted by TV health personality, Mr Motivator.

It raises the kind of obvious question which must dog high-profile businessmen in the consumer industry: do they actually use/eat/drink the product?

Boyd, ever the accountant, answers: ‘I try to rationalise my crisps. Crisps and weight are diametrically opposed.’

Within the next two years, Golden Wonder ‘hopes and expects’ to float on the stock market. Boyd also believes the snack industry is poised for a bout of rationalisation. ‘I could see Golden Wonder acquiring companies or being acquired in the near future. We could also have a licence agreement by the time we float, for example, bringing different snacks to the UK,’ he says. Two new products, both snacks, are due to be launched in the first half of next year.

The snack industry certainly shows no sign of the nervousness afflicting other parts of the economy. ‘Never look back, always look forward,’ advises Boyd.

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