Young’s in safe hands
Future bright with new buyer and new boss for seafood giant
FIFTEEN months of uncertainty have finally come to a close for Young’s Seafood and its 2,000 strong workforce. When a private equity group led by Lion Capital put the company up for sale in April last year, most observers thought a deal would be struck by the end of the summer of 2018.
Several names were flagged up as potential buyers, including the Japanese corporate giant Mitsubishi and Sun Capital Partners, best known as owners of the Bonmarche fashion chain and the bedmaker Dreams.
But CapVest, Young’s private equity owner of 11 years ago, was always waiting in the wings and now they have been reunited, this time through a tie up with the pork producer Karro Foods, which CapVest bought two years ago.
The union has created what is described as a ‘multi-protein food group with significant potential for further growth’.
The two will operate as separate businesses, although under the direction of Karro’s highly regarded chairman, Di Walker, who is now chief executive of the enlarged organisation.
She has already made her intentions clear, declaring it was an opportunity to develop an ambitious food business of considerable scale.
Young’s and Karro, she added, were complementary businesses which would have strong market positions in two important protein categories that were experiencing consistent long term growth.
It has been a difficult and unsettling year and a half for Young’s, particularly following the closure of the Pinneys salmon site at Annan which saw production moved to Grimsby.
But perhaps the biggest surprise in the whole package was the appointment of Seachill managing director, Simon Smith, the man behind Seachill’s highly successful Saucy Fish brand, as chief executive of Young’s.
Bill Showalter’s departure was not entirely unexpected after he had successfully completed the sale process.
He had also boosted sales and launched Young’s products into North America during his tenure, and no doubt he may look for something new in either seafood or food.
Simon Smith taking over will be well received in Grimsby. No one knows the seafood industry better and he has a talent for predicting eating trends among the public.
He will also have a loyalty and commitment to Grimsby, which is still Europe’s largest single seafood processing centre.
And he is likely to bring the same product innovation to Young’s as he brought to Seachill with Saucy Fish a few years ago.
Young’s, which has more than a £500 million a year turnover, will now want to look forward. It took a lot of flak from politicians in Scotland when it closed Pinneys – although, in reality, the business was not sustainable even when
“We are certain to see a more dynamic company, with new products and possible further overseas expansion”
Young’s bought it in 2009.
And it took a long time to recover from the loss of the Sainsbury’s salmon contract to what was then Marine Harvest in 2015, a loss said to have cost the company at least £80 million.
But on the plus side, turnover has held up reasonably well, important new contracts have been secured and Young’s has made a successful foray into the North American market.
It has also bought a large site in Grimsby, almost certainly as a foundation for future expansion.
Clearly, to have come back a second time, CapVest must have a lot of faith in Young’s and will do everything to drive its growth.
Young’s former chief executive, Wynne Griffiths, told the Grimsby Telegraph he had tremendous support from CapVest during his time at the helm and felt sure the reunion would hugely benefit the business.
Young’s is Britain’s biggest seafood brand and it also has a sizeable own label business, with Asda and Marks & Spencer among its customers.
It supplies almost every type of seafood, from salmon and shellfish to cod and haddock. Its Gastro and Chip Shop ranges are best-selling brands.
But to the outsider, fish and pork might seem strange bedfellows. And this is the second major deal of this kind; some 18 months ago, the red meat supplier Hilton Foods paid £80 million for Seachill.
Hilton is well pleased with its purchase, saying recently that it is making a strong contribution to sales and profits. And Seachill is now Hilton’s template for seafood expansion overseas.
CapVest must be hoping that Young’s and Karro will soon start to blaze a similar trail. Although not immediately evident, there are a lot of synergies between the two that should make this happen.
The likes of Hilton and Karro are coming under a great deal of pressure, with the food police urging people to eat less meat for the sake of their health and the planet, claiming that cattle are a major contributor to greenhouse gases.
The casual observer will have noticed the increasing appearance of vegan or plant based food products on the supermarket shelves over the past year or so, catering to a new type of consumer. So having a more diverse protein portfolio makes business sense.
Seafood companies have pressures of their own, not least the rising cost of the main raw materials. Cod and haddock prices have risen by an average of 15 per cent over the past 18 months and, with further quota cuts looming, are likely to go even higher. And, apart from the occasional short lived price dip, it is the same story with salmon.
There is also the task of winning over the under 25s, who do not see fish as a convenient foodstuff.
It is interesting to note that Young’s has recently launched its Scampi Popcorn Bites, a product clearly aimed at a younger audience, who like to snack.
Seachill has also introduced cod croquettes, which have the same attraction, and no doubt there will be more innovations of this type from these two Grimsby stables.
CapVest is determined that Young’s and Karro should not stand still, and we are certain to see a more dynamic Young’s, with new products and possible further overseas expansion.
China and Europe (Brexit permitting) are two possibilities. And, who knows? It may not be too long before Young’s is listed on the London Stock Exchange.