The Business Interview: Ben Thomson of Inverleith LLP

Thomson relaxes with his chocolate field spaniel. Picture: Greg Macvean
Thomson relaxes with his chocolate field spaniel. Picture: Greg Macvean
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Ben Thomson’s notable achievements span academia, the arts, business, politics and even sport – he competed as a decathlete at international level.

When considering his plans for the next few years, it is therefore not too surprising that he’s set himself the most ambitious trajectory imaginable.

“I’ve always wanted to go up into space,” he says. “Don’t you think you’d just love to be weightless and look down on earth from above? I think that would be an amazing experience for me personally.

“I think the thought of being outside the system and looking in gives you a really interesting perspective on it.”

Edinburgh-based Thomson’s current role is partner at private equity firm Inverleith LLP, which invests in consumer brands, bringing in an outsider perspective to power up their management teams and “put in all the bits” to make them commercial companies, taking them from, say, £5 million to £50m.

Its portfolio includes investments in The Scotch Malt Whisky Society and gluten-free specialist Genius Foods, both based in Edinburgh, as well as London-headquartered Emily Crisps, whose products are made with fruit and vegetables.

And Thomson is seeing clear trends emerge in the food and drink sector. “The consumer is buying things in a very different way than they did ten or 15 or 20 years ago. I think that therefore there’s a huge opportunity – and there’s also a risk in that.”

He flags up a consumer shift towards smaller, innovative companies where buyers feel “there’s a greater level of trust, there’s a greater level of craft, there’s a greater level of community.

“It’s interesting that 90 of the top 100 large American consumer companies are losing market share in their brands even though their markets are increasing… the market is splitting up into more brands and products than there were before.”

With the internet giving consumers access to unprecedented levels of information, they want to “understand a real story behind the product,” he says. “They’re less interested about what big brands tell them and they’re far more interested about what their peer group is doing and what the product says about them.”

Such a move is from “deference to reference”, he states. “We’re seeing the emergence of new and interesting smaller companies being able to quickly gain market share and build revenues against the big brands.”

And Thomson sees buyers refusing to rein in spending when it comes to innovative products they believe in, being prepared in some cases to pay up to six times the price of a mass-market product.

“They’re a very attractive consumer group that leads the market… If the average person who likes the product can talk about it for five minutes at a dinner party then it’s really valuable.”

A Fellow of the Royal Society of Edinburgh, Thomson says Inverleith has identified three key trends.

The first is the demand for wellness and health products, highlighted by Amazon’s $13.7 billion acquisition of Whole Foods earlier this year, which was described as a “bombshell of a deal”.

The second area, he points out, is lifestyle, a fast-growing market where businesses focus on a story behind the product, and which is typified by the likes of Barbour or Edinburgh’s Hunter Boots.

Thirdly he flags up heritage. Scotland is well-placed to thrive in this area. Hence the unveiling of Ambition 2030 in March. The Scottish Government-backed project was developed by the Scotland Food & Drink Partnership, which comprises key names in farming, fishing, food and drink, and aims to double the overall sector’s turnover to £30bn by 2030.

One of the strategic focuses is innovation, “embracing a new culture of developing new products and processes to drive growth”.

Thomson is speaking at The Scotsman’s annual food and drink conference next month, which will focus on ambition and innovation. He adds that Scotland’s advantages, such as its tradition of innovating, mean its food and drink sector can harness its potential in part by developing small companies.

Trade body Food and Drink Federation Scotland has found that 97 per cent of its nearly 900 businesses are micro to medium-sized.

As for what led to Inverleith’s focus on food and drink, Thomson cites factors such as big companies not really innovating, while their smaller counterparts are.

“And the good news is that if you can develop a company, grow it fast, and it has a good gross profit on it… then that’s exactly the sort of company that all the big companies are looking to buy.”

He points out Kellogg’s recent $600m acquisition of protein bar maker RXBar – as consumers move away from high-sugar products towards healthier options – and PG Tips owner Unilever last month buying organic tea and supplements firm Pukka.

“If you’re an inventor today, now’s a great time to be doing it,” says Thomson.

A second reason he highlights is that smaller firms are a difficult fit investment-wise for most mid-cap equity providers because the former do not usually have a professional management team in place.“Whereas our whole rationale is we want to go into small companies and actually help the team to professionalise themselves,” thus catalysing their growth.

Thomson started out as a physicist, studying at the University of Edinburgh before moving to CERN, the European Organisation for Nuclear Research. He then made the switch to investment banking, which saw a Big Bang of its own in 1986 when the stock market was deregulated.

Being part of a family which produced four Nobel Prize winners, Thomson went to investment bank Noble Group, where he was chief executive from 1997 to 2007, and chairman from 2007, until its sale to Portuguese lender Banco Espirito Santo in 2010.

This came after a spell at Kleinwort Benson, rebranded Kleinwort Hambros after being acquired by Société Générale.

Thomson believes his scientific training proved an excellent background for a career in business with its focus on problem-solving. “That actually is hugely important in looking at how anything runs.”

He has certainly been involved with a wealth of organisations, including an eight-year run as chairman of the trustees of the National Galleries of Scotland, while he is currently interim chair of Creative Scotland. However, he stresses that he is not putting his name forward to hold the position on a permanent basis, and his time in the role has seen him court controversy when he called for the law to require female Catholic and Muslim preachers.

Other achievements include writing the Thomson Review on rights of audience in the supreme courts in Scotland and establishing independent think tank Reform Scotland.

The latter’s first publication in 2008 set out its ideology, notably seeking more powers of financial control for Scotland. Thomson stepped down as chairman in 2015, having taken on the same role at The Campaign for Scottish Home Rule when it launched in November 2014. Thomson reportedly said at the time: “If Holyrood is going to be effective and genuinely accountable to the Scottish people, then it should have proper responsibility for domestic matters in Scotland.”

Today, he is adamant that Scotland should be able to dictate its own migration policy in the wake of Brexit, citing a vast, specific need to import skilled labour to support sectors such as hospitality.

Looking to his own ambitions, in addition to space travel he has some targets closer to home, including focusing on the personalised wellness market and a return to his academic roots.

“I’d love to get into education because I feel that I’ve had so many interesting experiences. At some stage it would be nice to feel that I was passing that learning on to others.”

Ben Thomson is one of the speakers at 
The Scotsman’s food and drink conference on 14 November: