Mackie’s puts £4m target on chocolate
Firm sets sights on supermarket and export sales as well as first ice cream parlour
MACKIE’S, the Aberdeenshire ice cream to renewable energy group, has targeted an eight-fold increase in chocolate sales to £4 million by 2020, as the cost of ingredients weighed on profits in its latest financial year.
The company, which is planning to open its first ice cream parlour in Aberdeen city centre in August, said its ambition is based on forecasts of stronger sales in supermarkets and developing new export markets for its chocolate across Asia, Europe and the Middle East.
It underlined the potential for its chocolate brand, which is made in its factory on its north-east farm, as its latest accounts revealed pre-tax profits dropped to £1.5m in the year ended May 31, down from £1.8m the year before.
Operating profit rose marginally to £1.24m from £1.23m, as turnover grew to a record £12.2m from £11.4m in 2015, the accounts show.
Family-owned Mackie’s said turnover from chocolate increased by 113 per cent to £500,000, which the firm said equates to a retail value of £1m. The growth came during a period in which the business, led by Mac Mackie and sisters Karin and Kirstin, invested £1m in new equipment for ice cream, chocolate and packaging production.
Mackie’s, which drives the bulk of its revenue from ice cream, said rising chocolate sales allowed it to take on five further production staff, expanding its total headcount to 71. Contracts with the Co-op, Tesco and Sainsbury’s accounted for 74 per cent of the increase in sales last year and Mr Mackie is anticipating further growth in supermarkets in the years ahead.
He outlined the company’s ambitions to develop exports for Mackie’s chocolate abroad, revealing Singapore, Malaysia, Japan, China, the Middle East and Europe are on the company’s agenda.
And he noted the introduction of a 35g single serve bar, adding to its 100g sharing pack, will open up new channels for the product, such as convenience stores. “We’re hoping to launch a couple of new flavours; maybe something more Scottish in nature to give it more originality,” he added. “New product development remains absolutely intrinsic to the Mackie’s brand – and the coming months will see us introducing new sized chocolate brands and new flavours across our ranges as customers increasingly look to try new combinations.”
Mackie’s said its ice cream sales grew by five per cent against a market in four per cent growth over the period. This was achieved against challenging cost conditions, which saw the price of cream more than double. The firm has now been producing ice cream, with markets as far afield as Australia, South Korea and Canada, for 30 years.
Mackie’s generates more than 50 per cent of its ice cream sales outside Scotland and has an eight per cent share of the UK market. It is on track to realise a long-term ambition by opening its first ice cream parlour, in Aberdeen Marischal Square development, this summer.
Mr Mackie did not disclose how much the company will be investing in the project.
But he hopes it will be the first of many Mackie’s parlours, stating that he “sees potential beyond Scotland” for the concept.
“It’s a great way for promoting brand awareness in a new country,” Mr Mackie said. “If you open an ice cream parlour in any big city it has a massive impact on your brand presence. We’d like to think it would work in a few cities.”
Asked if he was concerned about investing in Aberdeen amid the downturn sparked by lower oil prices, Mr Mackie acknowledged conditions were tough. But he said the decline appears to have bottomed out. “There is still money to be made in Aberdeen,” he added.
Mr Mackie said the collapse in the value of the pound since the Brexit vote should “logically” boost exports as long as it stays that way, although he noted the prices at which the company sells into export markets are set with distributors in advance.
Mackie’s operations are 70 per cent powered by its own renewable energy sources, including wind turbines and solar panels.
The company added a fourth wind turbine and commissioned a 1.8 megawatt solar farm over the period. Mr Mackie said he would like to invest more in renewables projects on the farm site, including a biomass plant. However he said opportunities are currently constrained.
He expressed disappointment the incentives for encouraging investment in renewables are no longer as favourable, following the cut in subsidies for onshore wind developments by the UK Government.
He hopes, though, that technology will develop in future to the extent such incentives are not as crucial for projects to get off the ground.
Mackie’s sells the surplus energy it creates to the grid.