KTC (Edibles) Ltd – The Interview

KTC (Edibles) is probably best known to the UK food industry as Britain’s largest independent manufacturer and distributor of oils and fats. The KTC and Sea Isle food brands, which it also markets here, are familiar to Asian and Afro-Caribbean consumers both in the UK and, through KTC’s export arm, in many countries overseas. KTC has had a busy last few months: significant new business wins on both the retail and foodservice fronts and the introduction of a number of new speciality products and recipe ingredients have gone hand in hand with KTC’s retail products’ increasing popularity with adventurous Brit consumers. It all means KTC is strongly placed for further growth all round, as Mike Baldrey, KTC (Edibles) Ltd’s Sales Director, explained to The Grocery Trader.

The Grocery Trader – When was KTC (Edibles) founded, and who by? What was the business’s initial focus?
Mr Jernail Singh Khera founded KTC in 1973. The company originally began trading in cosmetic oils, as used in the Asian community for health and beauty purposes. Originally a partnership operating as Khera Trading Co, it became a limited company and the name changed to include the “edibles” for impact, in 1979.

GT – Who owns KTC now? How do you sum up the KTC proposition, to trade customers?
The current owners of the business are the Khera family and myself, Mike Baldrey. Although I have a minority shareholding, it is significant. We have many of the most respected brands in the ethnic food industry, KTC, Sea Isle, Supermalt and Ashoka, to mention just four; we are always competitively priced and generally give an excellent all-round service. Quality has always been a top priority.

GT – Why buy either oils and fats or ethnic specialities from KTC?
It’s quite simple: we offer personal attention, competitive prices and have 700 products to choose from.

GT – The ‘corporate’ suppliers largely dominate the UK retail oils and fats market. What are the benefits to customers of dealing with an independent supplier like KTC?
The irony is that people perceive the so-called ‘corporates’ as bigger than us, but in trading volume terms, they’re actually smaller. Also, the others’ products are more expensive: they’re brand conscious and spend a lot on marketing, whereas we do not so we can afford to be competitive on price.

GT – How big is KTC in UK turnover and staff numbers? How fast is it growing? Do you export to other countries?
We have a total staff of 213: in 2006 our turnover was £87m, in 2007 it was £111m and in 2008 it’s projected to hit £190m. We export to most countries in Europe and Scandinavia, North America and the Middle East.

GT – What do you think is driving your extraordinary growth?
Much of our growth is driven by a combination of strong new products, the recognition by the multiples that KTC is an excellent supplier and partner, and the hard work of our first class sales staff, backed up by the flexibility of our set up to give people what they want, when they want it.

GT – Reading your website, you have specific product ranges addressing catering, bakery, retail, speciality and food ingredients. What proportion do they each contribute of your UK turnover? Which range is growing the fastest in sales?
Our fastest growing sectors are food ingredients, which includes bio-diesel; retail, which covers speciality foods; and food service. It’s very difficult to say how the business is split, as Asian consumers tend to buy various foodstuffs that we sell in what are effectively catering size packs, which they regard as retail products. KTC vegetable oil in 20litre drums is our most frequently bought product in the Asian sector.

GT – How many different retail and speciality products altogether do you offer to retailers? Which are the biggest sellers? Which are growing fastest?
We currently have about 700 products. The many different sizes of vegetable oils are the fastest sellers, along with Supermalt; those on an upward curve are Smoothies, tinned tomatoes, beans and other vegetables, sauces, coconut milk and lemon juices.

GT – Of your retail products, what proportion of sales is retailer private label and what proportion is branded? Do you have capacity to take on more retailer private label, and if so what kind of products?
I’d say the split is about 60/40 in favour of branded versus private label. We could certainly take on more private label vegetable oils. We blow our own PET bottles in our Wednesbury factory.

GT – What proportion of your retail and speciality sales go through supermarkets, Co-ops and C-store chains? How fast is this business growing?
The split between the major multiples and the wholesalers and smaller retail outlets is 2:1 in favour of the independent wholesalers and retailers, but the multiple business’s contribution has grown over 50% since January 2008.

GT – Where are your different oils and fats made? Where are they developed?
Our oils and fats are generally refined in the UK and blended and processed by us in Wednesbury and Liverpool. We develop all our own products with the help of the refiners and Leatherhead Food International.

GT – Where are your other retail products and your speciality products made? Do you make these products in your own factories, or do you act as importers and distributors for them?
Our products are made all over the world, but we process ghee (vegetable and butter), cream coconut, coconut flour, margarine, shortenings and syrups and pack pulses, beans, rice, cereals and spices here in the UK.

GT – Are you looking to take on the UK distribution of more imported speciality products?
Yes, we would like to hear from any importer or exporter who wishes to enter the UK market with a saleable product. We already work closely with Tilda and have just signed a dual branding agreement with CAROTINO, who are already in the multiples but want us to sell their products to the wholesale and independent retail trade.

GT – Who are your major UK customers?
KTC serves the whole spectrum of the UK and export food trade including the major multiples, the major wholesale groups and food manufacturers and processors supplying foodservice and retail.

GT – What is your brief as Sales Director? How are you organised in terms of sales to the different sectors?
My brief is to control and oversee our profitable sales to all the market sectors we operate in. We are well represented in the Ethnic sector and have specialist operators in foodservice, bakery and ingredients, as well as sales agents helping us across the board.

GT – What advertising and other consumer support do you do for these products?
We support the Notting Hill Carnival, as well as many food shows and regional Melas (Asian community festivals.) KTC has been a long term supporter of the Asian media, especially TV, films and magazines. We offer recipe leaflets on many items and have been associated with Madhur Jaffrey and other Asian cooks in the past.

Though not recently, we’ve also sponsored a substantial cookbook. We’re heavily involved in supporting local sports around Wednesbury and are long term sponsors of the local Walsall cricket team, last year’s Birmingham league winners, and various small local football teams, as well as an international Kabaddi (Asian ball game) tournament in Smethwick.

GT – You recently launched some exciting new products. What are they, and when did you launch them? How are they doing?
Our newest products are Smoothies, Peri Peri sauces and a new Sea Isle Very Hot Pepper Sauce, which will blow your head off! They were launched in April, so it’s too early to tell how they’re selling just yet, but Smoothies in particular look like a real winner. Let’s hope we have a good summer.

GT – What do you see as the major trends in speciality ethnic foods? How are you responding to these trends?
The major trend for us is the move to more healthy products with fewer additives and less salt. Generally speaking, the ethnic consumers we sell to are more prone to heart attacks than the white population, so we are supplying oils with less ‘trans’ fats and low, or no, cholesterol. All our margarines have very low salt levels.

GT – You’re currently involved with South Asian and Caribbean foods. Are you looking at importing foods from any other countries?
We’re generally looking to expand in the areas where we are currently strong, but occasionally items come through from other countries with the potential to be exciting additional sales opportunities, like balsamic vinegar from Italy. We are already large sellers of olive oil.

GT – Which of your products have crossed over from being bought purely by the ethnic community to being bought by Brits as part of their cooking repertoire, and which ones have the potential to do so? Have you modified any of your products’ recipes to appeal to UK mainstream tastes?
Our current crossover products are Coconut Milk & Cream, Chick Peas, Canned Beans, Basmati Rice and Hot Sauces. The ones with most potential to win new consumers are the exotic Smoothies. We haven’t modified our products, because they’re ingredients rather than recipe-based products, apart from our Ashoka ready meals: European consumers want exotic products, and there are literally thousands of recipes on the net for them to get stuck into which use our ingredients.

GT – With all this rapid growth, have you needed to increase your production capacity to keep up?
Yes and no. Our main warehouse occupies 230,000 square feet on an 11-acre site in Wednesbury. We moved in there in 1999, and it’s still our primary location, but last year we opened a new 80,000 square foot packing plant in Liverpool, to expand our vegetable oil operations.

GT – Who handles your distribution? How quickly can you deliver orders to UK customers?
We employ a local transport concern to help with the current explosion of interest, but still handle 30% of distribution ourselves. We get most goods to the customer in seven days, but some major operators insist on 3-4 days, which we can handle as long as it’s consistent. We have got emergency orders to customers the same day – we’re very flexible.

GT – Can customers order on line?
Yes, they can. We also offer an EDI service for some bigger customers, although most orders are taken by our reps on their remote order pads, or made by phone to our telesales operators or faxed.

GT – What standards do you work to? Have you won any awards for innovation, exports or other achievement?
We are accredited to the BRC Global Standard for Food. We were short-listed for the Black Country Business of the Year in 2007.

GT – What external factors do you see impacting on your business?
We have seen our raw material prices rise dramatically, partly due to the global trading conditions, a contribution to our turnover rising 75% this year to £190m, but we are comfortable with our financial arrangements. Because we are so entrenched in distribution, higher diesel prices have also hurt us. That said, we’re in the right place at the right time to prosper in the medium and long term from Brit consumers’ adventurous nature and desire to explore exotic and hotter foods. We have a lot of friends out there too, who would like to see us succeed.

GT – Finally, where do you see KTC (Edibles) going from here?
I’d like to see us continue to use our vegetable oils and fats as our bread and butter – forgive the pun! – while expanding further in the exciting arena of “New Continental Foods” and bringing in more profits from both areas. I’m delighted to see the increasing shelf space afforded to us by the multiples for these new KTC lines.

GT – What challenges are you most looking forward to as Sales Director?
I’d like to see us breaking profitably through the £200m turnover mark and then moving on to become the largest food manufacturer in the Midlands, and then my wife and I retiring to a coconut plantation in Bali!