Inside Business: The ice man cometh to market
Barry Thomas started out as an accountant but soon realised there was much more to lolly than the bottom line
Sunday 26 May 1996
"I don't feel like an accountant," he says. Nor does he look like one. At 58 this son of a Yorkshire church-organ maker still cuts a bit of a dash with his florid bow-ties, extravagant pocket handkerchieves and natty braces.
None the less, the record shows that in 1962 he joined Treats, the Leeds manufacturer of frozen confectionery, as company accountant. He became managing director in 1975.
More than 20 years on, he is about to guide what is now Britain's biggest independent maker of ice lollies through its stock-market flotation.
Executives from Unilever should be looking on with interest. Five years ago Treats was one of three of its companies producing similar products in the British Isles. The other two were Walls and HB. "We were the meat in the sandwich," says Mr Thomas. A more appropriate metaphor, perhaps, would be the ice cream in the wafer, being squeezed and melting rapidly.
Although the company was well run and comfortably in profit, by its managing director's admission "we had come to the end of reasonable development without a sizeable sum of money". Unilever's response to his request was not quite what he had in mind.
Owning another 20 or so ice cream manufacturers in Europe, the parent company was unwilling to invest in the Leeds site. Instead it decided to close it down. What is more, it was reluctant to sell to its own managers. Only a sustained campaign by the local press and MPs forced a change of heart. After all, this was the depth of the recession and 350 jobs were at stake. Mr Thomas and John Butters, his technical director, put up their houses as security, "along with just about anything else we could lay our hands on". Rule one of a management buy-out, he says, is to believe in what you are doing.
"If you have any doubts, keep them to yourself. I never had any. It had always been my business and I knew there was nothing wrong with it. We paid out our money on the Friday and the only thing that had changed by Monday morning was our bankers."
He won't say how much he paid but a venture capital company largely financed the deal. "We now think it's the right time to buy them out," he says. That's one reason for the flotation. But the main priority is to give the company more status and release more funds for investment. Over the past five years it has spent around pounds 12m in doubling the size of the site and buying some of the most advanced technology. It negotiated lease deals and bank loans, and ploughed back profits.
Treats has a market valuation of around pounds 20m. Turnover at the end of last year was up 14 per cent on 1994 and pre-tax profits of pounds 2.45m had increased by 16 per cent.
The company was founded in 1957 by two Italian families, the Lucardis and the Granellis, who still have a stall in Leeds's wonderfully decorative Edwardian indoor market. Ice cream was their business but today it accounts for less than 10 per cent of Treats's output. The bulk is accounted for by ice lollies with names like Zap and Strika. Trade is split roughly 50-50 between impulse sales from fridges owned by small retailers and private-label take-home products sold in multipacks at supermarket chains. Sainsbury's and Tesco are among them. "There are far too many people making ice cream," says Mr Thomas. "The competition made the margins unacceptable. Frozen confectionery needs higher investment and more technical expertise."
His enthusiastic guided tour of his hi-tech factory leaves no doubt that here is a man interested in the process of manufacturing as much as profit and loss. As we emerge by the side of a stretch of wasteland, he gestures into the middle distance and outlines plans for expansion.
Definitely not an accountant.
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