August 27, 2009
Talk with Fisherman's Friend
Doreen and Tony Lofthouse: "We love our business"
However, you will not be short-changed when you meet people as genuine as Tony & Doreen Lofthouse, joint-managing director viz. chairman of Lofthouse of Fleetwood Ltd.
Their headquarters are situated on the outskirts of the quaint fishing village of Fleetwood/England on the Irish sea, just north of Blackpool, with a view over Morecombe Bay.
Among the peculiarities of this windy seaside resort are a double-decker tram, a lighthouse and seagulls that never seem to sleep -- a quaint and quirky back-drop for one of the food industry's international success stories.
True to the motto "charity begins at home", the Lofthouses are generous local benefactors, but they don't flaunt their wealth.
These are hard-working, unpretentious and down-to-earth entrepreneurs from the north of England. Like most Northerners, they are canny people and run a no-frills operation, but there is not a trace of stinginess about them.
After a courteous and hospitable greeting, Doreen Lofthouse, the formidable, but kindly matriarch of the operation, got straight to the point: "What is the image of our brand in Germany?"
Although the company has been in existence since 1865, it was Doreen Lofthouse, who recognized the potential behind "Fisherman's Friend". Under her auspices, these extra strong lozenges, made of a tongue-numbing blend of liquorice, menthol and eucalyptus oil, have conquered the world.
Since the early 1960s, Doreen Lofthouse has turned what was once little more than a sideline at a local Fleetwood chemist's shop into a global brand worth €191m ($272m), selling 5bn lozenges a year in 120 countries.
This fiercely independent family company is run by the founder's great-grandchild Tony (65), his wife Doreen and her son Duncan. Outside shareholders need not apply. When I asked them about their family business, they clasped hands and said: "It's an extra strong marriage."
Tony Lofthouse was proud to show every nook and cranny of their clinically-clean factory.
The hands at the conveyor belts seemed equally proud of their work and everyone managed a smile. "We never suffer from colds here", said one woman in reference to the strong, but not unpleasant smell of menthol which pervades the site.
After the interview, the Lofthouses accompanied the guest from Germany to the company entrance. Looking back, as the taxi turned a corner a few hundred yards on, Tony Lofthouse was still standing in the rain waving.
Mr. & Mrs. Lofthouse, our photographer has just gone down with swine flu. Good times for Fisherman’s Friend?
Doreen Lofthouse: Firstly, we don’t wish anyone to catch the flu, but the fact remains that the efficacious properties of our brand make it a seasonal product with considerably higher consumption levels as from October each year.
Tony Lofthouse: In fact, Sainsbury’s have just got on to us, saying that in view of the epidemic Fisherman’s is a must-have, and that we must guarantee supplies.
Can you meet their requirements?
Doreen Lofthouse: Of course, because we don’t quite produce 24 hours a day. We can just turn on the tap.
Sweets sales are generally resistant in difficult economic times. Are you, however, adapting your price and marketing strategy to the current recession?
Tony Lofthouse: We are certainly leaving prices where they are so that we can guarantee excellent product quality. Instead, we continue to work with retailers in order to obtain the best possible positioning in-store.
What is a good positioning for your brand in the stores?
Doreen Lofthouse: Right by the tills.
But doesn’t putting sweets at the tills run the risk of annoying parents?
Tony Lofthouse: In France, there was a ruling whereby retailers had to take a lot of confectionary from the check-outs, but Fisherman’s was exempted because it isn't a children's product.
Do you prefer your brand to be placed in the confectionery or the health & beauty department?
Tony Lofthouse: Preferably both! But, if we are forced to make a choice, we always try to convince the buyer to put it into the confectionary section.
Does the buyer need much convincing?
Doreen Lofthouse: No, but our main problem is rotation. Our brand sells very quickly for a cough drop, but not for a typical a sweet
Germany is the world’s largest market for the Fisherman’s Friend brand, but it is dominated by hard discounters who have also produced me-toos. Doesn’t this ruin the party?
Tony Lofthouse: It’s a fact of life and something you have to live with. But in our opinion me-too products are currently losing market share because they cannot reproduce our core values, quality and product benefit.
Some critics claim that your entry into the German chewing gum market lacked conviction. Fair criticism?
Tony Lofthouse: The launch exceeded all expectations and achieved eight times more in terms of sales volume than we had planned. Unfortunately, we were not able to convince chewing gum users longer-term.
After all, at the time of the launch chewing gum users had been used to 50 years of Wrigley at the cash till stands so Fisherman’s Friend had a hard time of it on the sweets rack. However, I am convinced that we shall do better when we relaunch.
Some say that your “minis” haven't been so successful?
Tony Lofthouse: Minis have already been launched in various countries. In Germany, however, they are only on the market as part of an “in & out” promotion. This promotion has been very successful and has achieved a higher stock rotation than comparable products.
If you had one message to Germany’s retailers, what would it be?
Tony Lofthouse: Thank you for your support in stocking our brand, but please keep your buyers longer.
Tony Lofthouse: Far too often one builds up a relationship of trust with a buyer over the years and negotiates a promotional agreement only to have him or her leave to work for a competitor. Then the same person will want the same special deal at his or her new company from day one.
Presumably this can’t be stopped?
Tony Lofthouse: We want to stop this from happening and to conclude long-term partnership agreements. This has become necessary because there seems to be high job fluctuation among retail sweets buyers.
What makes a good retailer-supplier relationship?
Tony Lofthouse: Someone who is going to be with us for the long haul so that we can build a relationship with them without continually having to start from scratch.
As a Queen’s award winning exporter to 120 countries what did you think of the UK government closing “Food From Britain” last year?
Tony Lofthouse: It was not a wise move. Manufacturers in England need their help and expertise. FFB were able to point you in the right direction and were experts in their field.
Roughly what part of your total revenues is achieved in the world’s major regions, and where do you see the most growth potential for your brands?
Tony Lofthouse: Europe is our largest region taking up just under 80 per cent with Germany as the largest country. Asia follows with around 15 per cent; then North America; and other global regions take up the rest. We see the most growth in Russia, China and India because our brand has a global taste.
Are there no exceptions?
Doreen Lofthouse: Japan is the only one. The Japanese find our brand too strong. They prefer very sweet things such as Turkish Delight.
Even brands with a strong tradition like your own need to remain fresh. Some of your big competitors such as Wrigley have successfully diversified towards oral hygiene. Why haven’t you moved in this direction?
Tony Lofthouse: We believe in taking our time to do things right, and we don’t just throw things at the market as many other companies do. However, we do have some new things in the pipeline, which I am not at liberty to talk about yet.
You have 13 different flavours world-wide. Could you imagine going down the oral hygiene route?
Doreen Lofthouse: The trouble is that someone else has done it already and probably successfully, and more people will come in. So we think that we have been too late on this one. That said, I would never agree to just copy someone else. What we need to come up with are new ideas, but not any more flavours, please!
How do you nurture the innovative process?
Tony Lofthouse: We do go to flavour houses to keep abreast of the market, but we mostly use our own new product department and also listen to our distributors who often come up with new ideas.
Do you believe that you will be able to defend your niche against the Big Boys in the world sweets industry longer-term?
Doreen Lofthouse: Absolutely no doubt! In the past they have tried to muscle into our territory without success. Others have tried to pass off our name, which is registered over the whole world, and we’ve taken them to court – and usually won!
Have the Big Boys ever approached you?
Doreen Lofthouse: A lady from the Mars family has actually sat in our office and asked “Can we help you?” Well, I knew what she meant! She wasn’t going to help us, so we said “No thank you, we’re quite happy on our own.” Wrigley was the same.
Are you never worried about the succession problem and family continuity? Couldn’t your son tempted to sell?
Doreen Lofthouse: No, my son, Duncan, is absolutely dedicated to the business. He is a very gifted financial man and the logical successor to this business.
What are the advantages and disadvantages of running a family company?
Doreen Lofthouse: There are no disadvantages; there are only advantages because they listen to mother!
Tony Lofthouse: I think my wife’s motto is: “Be reasonable, do it my way!”
Doreen Lofthouse: Nonsense, this is an "extra strong" marriage!
But what if one of the family owners wanted to sell out? Are there statutes governing this eventuality?
Doreen Lofthouse: No, we don’t have statutes, but we have an internal agreement whereby all major decisions have to be taken unanimously.
Why do you remain a limited company? Would you not be able to expand more quickly if you could draw on the international capital markets?
Doreen Lofthouse: We wouldn’t wish to lose control. Having to explain to investors in our company what we did, why we did it, why have we not done this or that etc., it would drive us mad.
So you finance your expansion from your cash-flow?
Tony Lofthouse: Yes, we are totally self-financed and don’t even need bank loans.
Doreen Lofthouse: We can only eat three meals a day and drive one car at a time, so the money goes back into the company as well as a percentage of our profit into our foundation charity for the benefit of the Fleetwood community.
One last question, what is the secret of your success?
Doreen Lofthouse: I really don’t know, except that we care 24 hours a day not only about our brand but also about our staff. I think that this pays off in the end. The simple fact is: We love our business.
German version: Lebensmittel Zeitung, LZ 33, 13.08.09