The souped-up wheeler dealer
Once upon a time, Cyril Freedman brought us 'Valley of the Dolls'. Now he brings us Moroccan chickpea soup in a carton
Sunday 14 February 1999
Today, as chairman of S Daniels, the food manufacturer, he spices up the lives of the chattering classes in a more comforting way. S Daniels owns the New Covent Garden Soup Company (NCGS), maker of those handy soups in cartons with exotic flavours such as carrot and coriander, and Moroccan chickpea.
But then Freedman is not your typical businessman. His career has taken him through publishing, marketing and venture capitalism.
And he likes to think he is running a company that is not your typical manufacturer: "Most food manufacturers do it in big factories that look like chemical plants. We have cooks. The whole approach is about as far from mass production as you can get. And it's all natural," says Freedman over lunch at Langhams, just over the road from S Daniels' West End base.
The firm's other strength, Freedman believes, is that it has numerous outlets instead of relying on the big supermarkets.
"I'd rather have lots of customers and lots of suppliers, because the risk is lower," he says.
The range of his company's interests proves Freedman's commitment to diversification. Apart from NCGS, S Daniels already owns a couple of hot drinks businesses; Johnson's, makers of freshly squeezed orange juice (the kind that comes in little plastic bottles with screw tops); a fruit fillings company; Kent Seal Foods; and a sandwich fillings firm, Get Fresh, that S Daniels bought last year for pounds 2.5m.
S Daniels was founded after the Second World War, and went private in the mid-1980s. Since he took over in 1997, Freedman has sold its commodity- dependent dried-fruits business and is moving into fresh food. The strategy seems to be paying off. When the company reports its full-year results in March, analysts are expecting before-tax profits to jump to pounds 5.3m from pounds 2.4m last year.
Freedman says that, even if S Daniels does nothing more than what it is doing now, the business could double in five years. That's the plan at least. He sees his role as taking "a helicopter view" of the business, seeking acquisitions and liaising with the City while his partner, Michael Mills, a long-standing business associate and managing director of S Daniels, oversees day-to-day management. One City analyst describes Freedman as "very much a deal-maker".
S Daniels, says Freedman, is always on the hunt for fresh-food firms to buy. But he has strong criteria that have to be met before he gets his purse out, and "the key number is 15".
"Firstly, the prospect must be in a market that's growing at more than 15 per cent a year. Secondly, it has to make an annual 15 per cent operating profit on sales before costs. Lastly, the average return on cash invested has to be 15 per cent over a five-year period," he says.
There's another criterion: "All the companies we have bought so far were in difficult situations, which is why they were on the market. Buying from venture capitalists is much riskier as they know what they are doing."
Freedman should know. He worked for Apax Partners, the venture capital firm, for eight years. The first investment he made there was in the upstart NCGS back in 1989.
"Apax is strong on technology and media and less strong on the retail consumer industry," Freedman says. "But in this case, they invested in a market that didn't exist. There wasn't a fresh-soup market until NCGS. It was very difficult in the beginning. There were a number of risks."
The factory cost pounds 2m to build, but there was no guarantee that fresh soup wouldn't "just be a yuppie product for London", he says.
Then, in 1993, came what Freedman describes as "the inevitable argument with the entrepreneur who founded NCGS, ex-stockbroker Andrew Palmer. Along with co-founder Andrew Belt, he was ousted from the board by the largest shareholder, Apax.
"I feel very sad about what happened, but he kept criticising the guys running the company, so eventually they had to say: 'Sorry, but you have to go,'" Freedman says.
Four years on, Freedman was chairman of J Daniels when it took over NCGS in an agreed pounds 24m bid.
His first love was books, and he wanted a job in publishing, but Freedman "soon found they didn't get paid much": he went for interviews and was asked if he had a private income. He didn't, so he took a graphic design course in his home town of Brighton. A stint at Corgi books, when he helped launch Valley of the Dolls, taught him publishing "was all about marketing, and not much about publishing".
During a year at a marketing consultancy, he got his first taste of the food industry, marketing products such as Buitoni pasta, Mr Kipling's cakes and Young's beer. He describes dressing up in yellow outfits and selling Young's beer to council tenants in Watford.
Then, in 1972, with two friends, he set up his own consultancy. Lacking cash ("there weren't any venture capitalists in those days") it ran out of funds, but the trio managed to pull off a deal with the international firm Pentos, which invested and guaranteed loans. The business grew and a couple of years later, in 1974 ("the year the world collapsed") the three partners sold it and Freedman went to work for Pentos, which then bought Dillons the bookseller and Freedman returned to publishing.
Freedman stayed with Pentos for eight years. Then he set up his own investment- and-venture-capital consultancy which lasted until the stock market crash of 1987. But Freedman had the foresight to cash in his equity investments before then. At the end of that year, he joined Apax.
It's a lot of wheeling and dealing for someone who started life wanting to be an editor in publishing.
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