The founder of Latina Brands quit as a top MD to make escabeche and moqueca. But would punters or the supermarkets be tempted by such obscure food under a new brand?
You've got it made. You work from a pleasant office, complete with PA, impressive job title and a company car. You're in possession of a secure job, a regular salary and all the associated benefits. After years of hard work, you can finally afford to relax. So how would it feel to leave all that behind in favour of an unpredictable start-up company?
Elaine Underwood, the former MD of Sharwoods, took just such a leap. Last year, she abandoned the security of her corporate role and set up Latina Brands, a small company selling South American sauces to the UK's major supermarket chains.
For many, that would be a nerve-wracking move. Yet Underwood is a woman with rock-hard determination who is on a mission to succeed. She is self-confident and decisive, and appears never to have had a sleepless night during the transition from her secure role at Sharwoods to her more precarious position as founder of a start-up.
Underwood is amply qualified for the task. Until recently a career brands food executive, she is extremely tough and has a strong sense of her own destiny. As the one-time MD of Sharwoods, the poppadums-to-chutney food company that was part of RHM, she describes herself as a 'complete corporate animal'. As if to underline the point, she explains that when she took the helm at Sharwoods it was turning over pounds 35 million a year and when she left five years later she'd increased that to pounds 60 million.
From Sharwoods she was parachuted into a newly acquired RHM subsidiary company, Le Pain Croustillant, a company making frozen dough for the bake-off market (to you and me, part-baked bread that you finish at home).
In many ways, that appointment was a watershed for her. 'We had a lot of exciting times and I learnt a tremendous amount running a business that had been taken over from an entrepreneur. There were no systems or disciplines, there was a high error rate and a 42% employee churn over one year,' she says.
But like a lot of people who have just hit 40 she was restless, and within three months of joining the bread company she had started working late into the night on her South American adventure. But she insists that the motivation for doing so was not wholly down to financial considerations.
'In truth, I was sick of corporate life and just wanted to pursue things that I was interested in and be more in control of what I was doing.'
She left RHM for good in 1999 and two years later she was joined by Gareth Harris, who had been her finance director both at Sharwoods and Le Pain Croustillant. Underwood spent those two years doing consultancy work to keep things ticking over, travelling in South America to explore the region's foods, and sourcing products and recipes that would later go into her sauces.
'South America is one of the the great areas of the world where people travel to, and yet the food that they developed an appetite for there was, until now, not available for them when they returned to the UK,' says Underwood.
An agricultural estate owned by the Duke of Northumberland at the foot of the Surrey Hills is an unlikely setting for a food business. This is not your typical unit on an out-of-town industrial estate but a red-brick barn conversion in a picturesque part of southern England. A church sits just below, sheep graze under old oak trees and there is a feeling of a pastoral England only 30 miles from the centre of London.
The office of Latina Brands resembles more a down-at-heel advertising agency than a company that intends to take on the big food multiples and cut a swathe through the branded cook-in sauces market.
The normal route for most food entrepreneurs is to start supplying to the small independent retailers and, if there's a market, grow the business from there. Get your product into hotels, restaurants and visible high-street outlets - anywhere that will get them noticed. Then wait with fingers crossed for the supermarkets to come knocking at your door.
Supermarkets are tough commercial taskmasters. If you supply them and your product doesn't sell you won't supply them for long. They have shareholders to satisfy and the City scrutinises their sales per square metre in detail. As well as own-label brands, they have thousands of independent suppliers offering everything from cheap bleach to baked beans.
These things either sell or they don't. If a supermarket decides on a bout of in-store promotion to boost the sales of a slow-moving line, the supplier has to make a substantial donation to the costs of the promotion.
So imagine going straight to the supermarkets with an untried and untested line of cook-in sauces that have never been seen in this country before. That's exactly what Underwood did.
Yes, there are Italian, French and Indian sauces, and probably Mexican sauces too, but no South American sauces of significance are being sold by the big food retailers. While consumers long ago accepted such exotic additions as pesto and lime pickle, escabeche and moqueca are not yet part of the international food vernacular. Changing public perception is unlikely to be easy but Underwood is convinced it's possible.
Since launching in October 2001, Underwood has now recruited four employees to Latina Brands. One of the most important is Dolores Espinoza, a young Ecuadorian cook who tests all the sauces in a kitchen located at the far end of the barn. Once they get the thumbs-up it's off to the various manufacturing contractors who produce the food for them.
Latina has steered clear of actually manufacturing the sauces that they sell. 'We use several manufacturers across different product ranges, and for the sauces we use Wessex Fare, a small family-owned business in Dorset.'
This, of course, means that Underwood has none of the cost and little of the risk of manufacturing food that may or may not be a big hit. She's also been smart in attracting investors. Apart from herself and Harris, who have overall control of the business, she has a small venture-capital company, Springboard Plc, one private investor and one of her manufacturers as equity partners in the business. 'We got two of the investors through personal networking, and we approached Springboard having seen their advert in a magazine,' explains Underwood. 'We were in quite advanced talks with HSBC Ventures at the time. But we took a long time to choose who to go with.'
Her business is taken up with testing recipes, sourcing produce and marketing a brand, rather than manufacturing. So how did she manage to get her barely established products onto the supermarket shelves?
'We went to see Waitrose first, whom we knew quite well, and they immediately took it for 137 stores,' she says. 'Sainsbury's followed with 270 stores and then in April Safeway bought for 300 shops. Tesco remains a problem, though.'
It seems that Tesco is yet to be convinced of Latina Brands. 'We cannot even get an appointment to see the buyer, and I suppose you'll have to ask them why.' She thinks there is a certain amount of arrogance at Tesco, and although it would be nice to be there, it is not essential.
The key to Underwood's success was the contacts she'd made while at RHM, which she exploited as hard and as fast as she could. 'Trade suppliers, distributors, manufacturers and, of course, buyers,' she says. 'They knew me and I knew them, so I got an audience. I think if you're going to start on your own, do it in an industry that you know about.'
Tesco apart, the business is going to plan. Underwood has just started selling to northern supermarket groups Booths and Morrisons, both vital for the company's geographic spread.
'The great thing is that we are introducing a new cuisine to the public and we are starting from scratch,' says Underwood. Although the public has proved receptive to ethnic foods, there is still some education to be done. Latina Brands has plans to sell the sauces in bulk to pubs and night-clubs for themed evenings. 'In the US, South American food is big business, Ceviche bars have sprung up much like tapas bars have here,' says Underwood.
The business is on schedule to become an pounds 8 or pounds 10 million operation in three years and a pounds 30 million business in just eight. Ten months in and it's ahead of its targets in terms of sales and the bottom line. And maybe it won't be too long before Tesco is knocking at Underwood's door.
FROM CORPORATE COMFORT TO CONFIDENT START-UP
- When starting a new business from scratch, go into a sector you know well.
- Take time to develop the product or service and be clear about what your unique proposition is.
- Be ready to use every contact you've ever made; network furiously and leverage the experience you have.
- Shop around for financial backing, and if possible use a variety of sources.
- Accept that at the outset your working patterns will change substantially - hours may be irregular and the business may take precedence over everything else. Family and friends, be warned.
- Cover your financial bases. It's no longer your employer's money on the line - it's yours. Assume everything will take a lot longer than you expect.