The many biscuit packets strewn across the conference room table in Michael Carey’s office on Fitzwilliam Place offer the first clue as to the entrepreneur’s latest business venture.
It's market research for East Coast Bakehouse, a start-up food company launched in Drogheda on Tuesday by Carey and other investors. It will create 100 jobs and hopes to be operating at full tilt by the end of the first quarter of 2016.
The Bord Bia chairman and former co-owner and head of the Jacob Fruitfield group plans to produce a range of sweet biscuits – plain, cookies and chocolate-covered.
He has yet to secure a customer but the business plan is coming together.
Most of the former management team from his time at Jacob Fruitfield have signed up, including his wife Alison Cowzer as marketing and innovation director.
Some €15 million in investment has been secured, with €2.5 million spent on purchasing a disused steel factory in Drogheda, offering 50,000sq ft of production space and 8,000sq ft for offices.
Carey and his wife have raised €3.5 million from 12 investors and secured backing from Enterprise Ireland. The investors include Stephen Twaddell, a former European president of Kellogg's, and Louthman Patrick Joy, the founder and owner of the Suretank Group. Both will be non-executive directors.
Personal stake
Carey and Cowzer have a near 50 per cent stake through their Company of Food investment vehicle, with the investor group holding 30 per cent and management having the balance.
All of the machinery needed to bake the biscuits has been ordered, recruitment of a development baker will begin shortly, and work on branding and recipes is well-advanced.
The product will be “mostly exported” – the UK biscuit market is worth more than €2 billion annually.
In Ireland, about €3.3 million worth of biscuits is sold by retailers each week. “Practically all of it’s imported,” says Carey, save for some artisan producers.
It’s brutally competitive and highly fragmented but Carey believes there’s a opportunity for his company to take a bite out of the market.
“It’s a good opportunity to pursue a sector that’s not being served by Irish manufacturing currently,” he explains. “But the export opportunity is the big one, that’s where the scale will come from.”
Household brands
Carey’s desire to establish a food manufacturing facility in Ireland is at the other end of the spectrum from the strategy he implemented at Jacob Fruitfield. Before its sale to Valeo in 2011, Jacob Fruitfield’s two factories in Dublin had been closed and the manufacturing of popular brands such as Kimberly, Mikado, Coconut Creams and Club had been moved abroad.
“At the time, Jacob Fruitfield was probably producing about 10-15 per cent of the Irish market but it was highly inefficient and uncompetitive,” Carey explains. “There was a need for significant change, particularly in the manufacturing side of the business. It had issues that needed to be addressed.
“It’s not an enjoyable process to go through . . . but it was done with agreement, and there was no industrial action. We did what was possible and what was right.
“This new facility will be completely different. It’s a modern factory, new equipment, more efficient production, fewer people.”
Carey has been helped by the fact that the costs of setting up a new manufacturing business in Ireland have dropped dramatically since the economic crash in 2008.
“Certainly acquiring the building would have been a multiple of the price we paid but, in terms of the cost of doing business, there’s still a lot of progress to be made. Things like rates, electricity and fuel are all higher in Ireland than internationally.”
Professional fees are "still complete nonsense", he says, tongue firmly in cheek. Carey has been a director of leading PR firm Drury Porter Novelli for the past two years. For the record, William Fry is its legal adviser. "They've done a great job for us on this," Carey says with a broad grin.
East Coast Bakehouse will produce a mix of branded products, own label for retailers, and outsourced production for other biscuit makers, a common feature of the industry.
Chocolate biscuit
It marks a return to a sector where Carey estimates he’s spent half of his career. Other roles included a period as managing director of Fox’s Biscuits in the UK. His favourite biscuit after all those years?
“Anything with chocolate,” he says diplomatically.
How often would he consume a bickie? “I probably eat a biscuit every day. But clearly you shouldn’t eat biscuits to excess. The consumption of biscuits as a snack is perfectly fine.”
Carey sold Jacob Fruitfield to Valeo Foods in 2011, earning about €15 million in the process. He also got a 10 per cent stake in the enlarged Valeo, which he continues to hold. But he stepped down from the Valeo board two years ago. How does the company feel about him effectively setting up in competition to Valeo?
“It’s not directly relevant other than they now have the opportunity to source some production in Ireland potentially. It’s minor competition.”
Over the past four years, Carey has filled his time with various directorships and chairmanships, including of Bord Bia, the State’s food promotion board. He waives the annual fee of €25,000 and pays his own expenses on trips. The role requires about 35 days a year of his time.
Why not take a fee?
“I just prefer to do it this way and have no questions about going off on trips with the Minister on taxpayers’ money. I’m happy to pay taxes and I’m happy not to benefit from taxpayers’ funds when I go away on trips. For me it just feels right. It’s a real honour and I love doing it. I think it’s right to contribute something.”
Birth of Zaragoza
His Company of Food vehicle has invested about €2 million in a handful of companies, including in the popular Spanish tapas restaurant
Zaragoza
, in which he and
Ed Ronayne
are the main shareholders.
“This year it’ll do about €2.5 million turnover; it’s really hopping at weekends,” he says. The name came from a “random brain-storming session”.
“Apparently it’s a beautiful city but I’ve never been. And ironically there’s a restaurant called Dublin there, which has caused us a few difficulties on Google.”
Having netted millions from Jacob Fruitfield, Carey and his wife could sit back and simply enjoy the fruits of their labour rather than taking a risk with a start-up business. But that’s not Carey’s style.
“You can’t sit around for 20 or 30 years doing nothing. We love the food industry. We get a real buzz out of doing stuff in the food sector. The opportunity here is very real. We could create something of scale and hopefully it will be financially successful and give a good return for all of the investors. The opportunity was screaming out at us.”
Carey’s target is for the East Coast Bakehouse to be in profit by the end of year two. The potential exists to double or treble its production capacity from the start-up phase if the market response is positive.
“If we’re at full capacity in this plant, we could do somewhere between €20 million and €30 million,” he says. “It’s all down to securing the contracts. We’ll get the business if the products are good enough. It’s a long-term commitment and could become a platform for doing other things or acquiring other things.
"But that will only become an option if we can make a success of this project. It's certainly within the capability of our team to make it work, subject to customers wanting to buy our products and eat them." CV Name: Michael Carey Age: 52
Job: Chairman and chief executive of the East Coast Bakehouse
Family: Married to Alison Cowzer. They have two daughters
Lives: Rathmines.
Hobbies: Plays golf.
Something we might expect: He eats a biscuit every day.
Something that might surprise: He’s chairing the Grow Dublin Tourism Alliance, a public-private partnership charged with developing a brand for Dublin.
