NFT Distribution's Ross Eggleton on the operator's new game plan

Chilled food distribution specialist NFT Distribution has had to adapt to a changing marketplace in the past few years.

As the logistics provider to a range of food retailers including ASDA, Sainsbury’s and Marks and Spencer, it has seen volumes shift sharply as newcomers, including Aldi and Lidl, disrupt the market in a business that already functions on extremely tight margins.

Those market headwinds, combined with last year’s delays at Calais due to migrant incursions and the cost of buying chilled distribution business NR Evans for £20m, saw the firm’s turnover fall to £158.6m (2015: £162.6m) last year and the company record an operating loss of £13.4m in the year to 31 March 2016.

Against this backdrop NFT Distribution, which is owned by private investment firm EmergeVest, recently announced a management restructuring that comes into full effect in the new year.

The move is part of a two-pronged strategy, which will see current CEO David Frankish become NFT vice-chairman and a senior advisor to EmergeVest, with a brief to focus on M&A opportunities and strategic customer development.

Meanwhile, chief operating officer Ross Eggleton has become deputy chief executive with immediate effect. He will become chief executive in January, and is tasked with taking the company to the next level of growth.

Whilst pointing out that revenues are on the rise this year, Eggleton, who was group logistics and supply chain director at Morrison Supermarkets, makes no bones about the challenges the firm faces.

Speaking to MT he said: “In the past two years we have not delivered to the levels we want to, but the market has been turbulent and the retail sector has changed with a lot of volume shifting between retailers and as a result that has affected our volumes.”

So how can NFT Distribution protect itself from these market trends? One strategy is to broaden the firm’s customer base both in the food retailing sector and beyond, said Eggleton.

“Part of the plan is to work with a broader set of suppliers and manufacturers. As well as growing strategically with key retailers we also want to work with more retailers and with manufacturers that are delivering into a whole range of retailers.”

He added: “I think NFT has always been a good business that is positioned quite well in the industry but there is still huge potential to expand our retailer base. There is still room for an even stronger chilled food logistics provider and there is a real opportunity to grow.”

Acquisitions?

Acquisition may also be used to complement this organic growth, Eggleton said, but only if potential acquisitions meet key criteria. “Growth through acquisition is another alternative but the majority of growth will come from organic growth complemented by acquisitions and these will only take place if they are at the right price and make a good fit,” Eggleton stated.

NFT Distribution is also looking to drive growth this year by offering a range of services to new and existing customers through NFT London, the firm’s 230,000ft² multi-temperature transhipment warehouse, which opened at Tilbury Port in April 2016.

Built at a cost of £25m, the facility handles 25,000 pallets a week and links the port to NFT’s nationwide chilled food logistics network.

“We are looking to make new deals and attract new customers into NFT and increase our bandwidth of customers through our port-centric facility,” Eggleton explained.

The firm is targeting international food importers and food retailers with the offer of a facility which offers an alternative to often disrupted overland routes into the UK.

It is also hoping to attract more UK-based retailers and manufacturers by being able to cut the cost of distribution and speed up produce deliveries by supplying direct from Tilbury to retailers and manufacturers in London and the south east.

Eggleton also sees potential opportunities arising through EmergeVest’s Cargo Services Group which, via its subsidiary World Food Logistics, manages international shipments of consumer goods bound for retail markets in the UK and Europe, Hong Kong, China, Australia, New Zealand, South Africa and the US.

“There is an obvious synergy there between our port-centric facility and mainland distribution of products for growers and suppliers delivering into the UK on the produce side – and we can offer value services such as unloading, sorting, re-packing and distribution of produce to retailers and manufacturers in the UK,” he said.

Looking after clients

However the firm’s ambitious growth plans have to be balanced against the need to look after the firm’s existing customers, Eggleton told MT. To this end Frankish, who joined the company 30 years ago and led its management buy out from Northern Foods in 2006, will continue to look after key customer accounts while Eggleton beds into his new role.

“David has been at NFT a long time. He has key customer accounts and has relationships which have formed over a very long time and we want to preserve those relationships and so it makes sense for David to continue to look after those relationships while we transition them,” said Eggleton.

He added: “What we need to do is ensure we have good foundations in place and put down strong building blocks on which to grow the business further. But we can only do that successfully by providing our existing customers with excellent service.

So, it’s a dual strategy of rolling out ambitious growth plans whilst at the same time doing a great job with the volumes we already have.”