Irish food group seizes ripe opportunities
It had its origins in Liverpool, however, where Dubliners Nicholas Smyth and Hugh McNulty set up a small venture selling fresh produce in 1924. The pair returned to Dublin a decade later, relocating the business to Dublin Corporation’s fruit and vegetable market.
By the time Andrews joined the company in 1997, Ireland’s wholesale sector was on the brink of change.
Centralised distribution
Andrews and his wife subsequently took over the company, but faced an immediate challenge as the retail trade moved towards centralised distribution in the late 90s. “It was a very difficult time,” said Andrews. “The traditional market structure would have been the local or regional wholesaler, who sold to a lot of the major supermarkets, so you could have a number of wholesalers with a local presence. ”
At that time, Smyths was well known in Dublin, where Andrews estimated it was supplying fresh produce to ten supermarkets.
“In the late 90s, I think SuperValu was the first supermarket to centralise distribution. That meant it started working solely with the bigger firms – the multinationals like Fyffes and it cut out the wholesalers in between,” he said.
Andrews said the centralised distribution model made economic sense for supermarket chains, but left small suppliers out in the cold.
“Instead of having 20 different trucks delivering 20 different groups of products to each supermarket each day, the retailers would have had a couple of trucks delivering all their fruit and veg to one warehouse.
“They would distribute it from there to each of the supermarkets and this affected us for the next couple for years. We saw a big decline in the overall wholesale business – as much as 50 per cent,” he said.
Lidl’s arrival
Smyths’ fortunes changed when, in the early 2000s, it was contacted by a discount supermarket group from Germany, intent on making inroads in the Irish market.
By that time, Smyths employed 15 people at its Smithfield premises.
“In about 2001, we started supplying Lidl with a number of lines – pre-packed onions at first, and then bananas,” said Andrews.
“After the trial period had passed, we realised that we were going to need a dedicated ripening warehouse for the bananas so, in 2002, we bought a warehouse in Northwest Business Park in Blanchardstown with ripening rooms.”
Bananas account for one third of Smyths’ annual €15 million turnover. Since it first started working with Lidl, the company’s staff numbers have quadrupled to reach 60.
“There are a number of other suppliers who sell to Lidl, but there’s a good chance that we are covering nearly all of the stores,” said Andrews.
“We sell three lines to them: Fairtrade organic; loose conventional – by conventional I mean they’re not organic or Fairtrade; and fun-size.”
Banana business
Smyths has been importing Fairtrade bananas since 2007, sourced from Ecuador, Peru and the Dominican Republic.
The company’s ripening facility underwent expansion in 2011, with the addition of eight new ripening chambers with combined capacity for delivery of up to 30,000 boxes each week.
“Bananas have always been a big product for us because we were one of the few companies that imported them directly and ripened them ourselves, and Lidl has given us the opportunity to grow with them,” said Andrews.
“They’ve given us opportunities where previously we found it very difficult to get a foot in the door with other supermarkets. With centralisation, all of a sudden, you had to be working on a massive level to be able to cope with the volumes they needed. If you didn’t have the facilities, you weren’t able to deal with them, but if you weren’t dealing with them, you couldn’t build the facilities, so it was a barrier to entry.”
The Fresh Market
In addition to bananas, Andrews said Smyth sold “just about any fruit you could think of,” including citrus, tropical and dried fruit, vegetables and herbs, to shops, hotels, restaurants and wholesalers around the country. The company itself owns four food stores in Dublin, operating under The Fresh Market brand, in Marino, Cabra, St Mary’s Abbey and Malahide.
“When we opened the first shop in Marino in 2008, the world was undergoing a lot of change with the credit crunch,” said Andrews.
“We had a number of customers who were experiencing difficulties and we thought ‘Wouldn’t it be great if we could supply ourselves, and guarantee payment’.
“We had the opportunity to open up in Marino. A former customer had been based there, so we knew it had good potential as a location for that sort of store.”
Smyths has since opened, and subsequently closed, Fresh Market outlets in Artane and Portmarnock.
“We give them two years,” said Andrews. “If it’s looking like they’re not going to be able to ‘wash their face’ within that time, you have to shut them down. There’s no point throwing good money after bad.”
For more information:
Marc Andrews
Smyths Food Group
marc@smythsfoodgroup.ie
www.smythsfoodgroup.ie
Source: Sunday Business Post