In a market where provenance, heritage and a sprinkling of nostalgia are proving as addictive to consumers as a sugar rush, Coatbridge-based confectioner Lees of Scotland has revived its “Lees, Lees, more if you please” slogan in TV advertising highlighting the appeal of its distinctive snowballs.
The treats – mallow with a chocolate coating topped with coconut flakes – sit alongside other products for which the brand is famous, such as macaroons, teacakes and tablet.
And eyeing more for the firm itself is chief executive Clive Miquel. He joined the company in 2004 as commercial director when turnover was just inching above £12 million mark, and this has now increased to £20m, driven by a headcount exceeding 250.
Miquel was later appointed managing director of Lees of Scotland, and in 2009 following a boardroom restructure was appointed chief executive at holding company Lees Foods.
The business was founded in Coatbridge in 1931 by grocer’s son John J Lees, who created its macaroon bar when trying to produce a smooth chocolate fondant version. The product has become a “Scottish icon”, according to the firm, which bills itself as one of the UK’s top independent manufacturers of branded confectionery and meringues.
It has changed hands on several occasions through the decades, acquired by Northumbrian Fine Foods in 1991, with Miquel’s father Raymond and business partner Klaus Perch-Nielsen taking it back into independent Scottish ownership two years later. It floated on the Alternative Investment Market in 2005.
The firm delisted with a £5.6m management buyout in 2012, and Miquel welcomes the move putting an end to dealing with shareholders who were sometimes “a bit disruptive” and not shy in expressing their opinions.
Coming off the stock market was “quite a big moment”, enabling far more leeway in decision-making, he says. “You don’t have to concern yourself with how that’ll impact on market expectations of the business and you’re obviously in total control. Certainly, the market wasn’t for us, and as private owners it’s a far better environment to be working in.”
Support for the buyout came from parties including Alasdair Locke, the Aberdeenshire-based oil tycoon who made £120m when he sold his London-listed energy services firm Abbot Group, while Miquel notes that about 6.5 per cent of shareholders were opposed. “It was quite a stressful time, if I’m honest, coming off the market. There was a lot of work involved in doing that, but we’re all delighted that we got there.”
Miquel had been determined from early on to pursue a career in the corporate world and after dropping out of his business management degree, he moved to France and spent two years travelling around the country with the Camus Cognac Company sales team.
It marked a return of sorts to his family roots – with the Miquel name coming from his French grandfather and apparently originating in the Basque Country.
He then returned to Scotland and worked in the advertising industry for ten years. In 1991 he joined Whyte & Mackay Distillers as export marketing manager and in his 12 years with the group made the move into the sales side, with his final role in 2003 European sales director. “I was very fortunate in the roles there,” he says. “I got to travel the world and get a lot of other experiences as well, so internationally it was very good, and it certainly provided a good grounding in both sales and marketing for coming to Lees.”
Arriving at the Scottish firm with such an international mindset, he believed he could “conquer the world” with its snowballs and teacakes.
But the relatively fragile and perishable nature of Lees’ products proved less suited to travel than a robust bottle of Scotch, and while the firm has gained some traction in international markets such as Canada, France, Malta and Norway, virtually all of its sales are in the UK, with two-thirds of that in England.
“Whilst we’re known as a predominantly Scottish business, and there’s no doubt the Lees brand is stronger in Scotland, we actually sell more of our product south of the border – because there are ten times more people there.”
The firm in 1998 moved production to an 82,000 square foot purpose-built facility, having moved from two sites, while in 2009 Miquel’s move to his current role saw him replace Raymond (a longstanding part of the business) as chief executive.
Miquel senior was by then no stranger to being in conflict with his board, ousted at Scottish brewer Belhaven, which he had briefly owned and led, while as chairman and chief executive of whisky group Bell’s in the 1980s he was defeated in a prolonged takeover battle for the group by Guinness (now part of Diageo).
Miquel junior admits that the clashing of swords at Lees was a difficult process, with a divergence in views over the business’ growth strategy having ensued. But he highlights shareholder and director support to “make some changes” that year, and the business in 2010 made a £1m profit for the first time. “I’m still very proud of that and we’ve maintained that kind of level, so it was definitely the right thing.
“I see myself and the directors as custodians of the Lees brand – we’re just passing through here. We’ve had a pretty solid performance in the last ten years.”
He sees Lees as “a lovely Scottish brand”, with the decision made in recent years to move from an ad-hoc approach to advertising to a “consistent” message delivered regularly, putting the brand centre-stage.
It was recently revealed that turnover in Scotland’s food and drink sector hit a record £14.8 billion in 2017, the latest year for which figures are available, with the 6 per cent year-on-year increase at the upper end of targets. A target of £30bn by 2030 has been set.
And Lees, in a bid to meet demand, particularly for the growing meringue side of its business, has been adjusting its working patterns to be more flexible and boost capacity at peak times.
There is stronger take-up for meringue products in the spring and summer, while confectionery such as snowballs and teacakes are more popular in colder months, making for a complementary offering.
As where for the focus is now regarding Lees’ growth, Miquel says it’s across the range, “it’s innovation, it’s new products – that’s very important for the business”. Lees has, for example, launched caramel teacakes, and almond-flavoured macaron-meringue hybrids known as “macaringues” that are selling to retailers and catering firms – and even feature on the menu of Slug and Lettuce pubs.
“Breaking into new areas with new products, that’s really the focus,” says Miquel. “You need to innovate to stay ahead. We’ve launched quite a number of new products in the last year, and have a lot of plans for this year also.”
Work is underway with a retailer with a view to a forthcoming “Christmas tree” meringue, for example, while a strawberry and white chocolate product has already hit Waitrose shelves.
“We’re always trying to come up with new flavours, new shapes, new designs, new areas to develop the meringue category.”
While the firm has not been averse to acquisitions – it owned Glasgow-based ice-cream cone and wafer maker Waverley Bakery, for example, but sold it for £5.2m in 2016 – further deals are not top of the agenda.
“The challenges we face just now are increasing overhead costs, whether that be gas, electricity, labour, transport. That really is impacting upon us, like it does everybody else, all manufacturers over the last couple of years, so we need to work hard to mitigate those costs through driving efficiencies in production and other initiatives. We look for steady, profitable growth.”
He also acknowledges the far greater focus on dietary sugar levels, saying Lees is mindful of the issue, and regarding the confectionery side of business that it’s a case of everything in moderation, while its meringues are low in calories, zero fat and gluten-fee.
Legislation came down in Lees’ favour in the debate as to whether snowballs were classified as cakes for VAT purposes. Judges – who were reportedly presented with a plate of Jaffa Cakes, Bakewell tarts, tea cakes, Lees snowballs, Waitrose meringues and mini jam snow cakes – ruled that snowballs were cakes and therefore exempt from the tax.
“That was a good victory for us,” says Miquel, with fellow Lanarkshire confectioner Tunnock’s also benefiting from the ruling.
And the Lees boss rules out any rivalry between the two firms, praising the success of its counterpart. “They’re our good friends. We have a great relationship and if we’re ever stuck one or other will get in touch with each other to try and help each other out. There’s enough room on the shelves for both of us.”