"Come to ask me impertinent questions, eh?" growls Gordon Baxter, with an ogreish grin. "Want to know what my turnover is, I suppose. My profits." Gulp. This could be the first recorded case of a journalist being sent back to his editor in a tin. "Well, I'll tell you. Turnover, £30 million this year, with profits at £3 million. £35 million next year, profits of £3.5 million. So there." Baxter explodes in rubicund laughter, bangs a tweed-clad fist on his desk. "Ha. The Bank of Scotland owes me money."
The story so far. In 1868, Gordon Baxter's grandfather, George, opened a grocery shop in the pretty little Speyside village of Fochabers. In 1914, George's son, Gordon's father, William Baxter, expanded into a small plant devoted to bottling the popular produce of his jam-making wife, Ethel. Seventy-seven years later, WA Baxter and Sons, Limited, are purveyors of food to, among others, Their Majesties The Queen (canned fruit), Queen Mother (Scottish food specialities), the King of Sweden (unspecified) as well as to innumerable commoners in 60 countries worldwide. Backing up marmalade and Baxters' most famous product - Royal Game Soup, sold in tins decked out in family tartan and stags courtesy of Landseer - the company now has 450 other discrete product lines, including (most unLandseerishly) a range of vegetarian soups, introduced three years ago.
Despite its burgeoning size, Baxters of Speyside, the holding company of WA Baxter and Sons, remains entirely family owned. It also provides employment for a similarly burgeoning range of Baxter progeny, including Ian Baxter (brother of chairman Gordon), and Andrew, Michael and Audrey Baxter, Gordon's three adopted children. George Baxter's wooden village shop remains, symbolically, the centrepiece of this family affair, its brass and mahogany shelves still polished daily with religious reverence. Lest all of this sound like a story of the triumph of corporate fuddy-duddiness, let us look more closely at George's shop. It may still contain the original apothecary's drawers in which Ethel kept her spices, and its faintly perturbed-looking staff may still sport whiskers and bonnets, but one thing has changed, and radically: its location. Until 1968, the building stood in downtown Fochabers. Due to be replaced by a pair of bungalows, Gordon Baxter had the whole lot uprooted, dismantled, moved a mile down the road, and re-mantled. In any other family, this action might have seemed like a mere quirk of familial sentimentality. Not, however, in the Baxters. As Audrey, ex-City merchant banker and head of corporate development, candidly puts it, George's shop has now become "a little cash cow" attracting 167,000 visitors a year. Appetites first whetted by a promotional video, these same visitors, bussed in from all over the country, part with "in excess of £1 million a year" on everything from tinned grouse to gingerbread men.
There is, in other words, more to the Baxter story than mere quaintness, for all its stags and tartan. The family may maintain, with impressively collective voice, that their product sells because it is the best ("You won't make it in this market if dog-food comes out when you open the tin," says Audrey), but the success of the Baxter recipe also has something to do with marketing, which in turn has much to do with Gordon Baxter. In the late '40s, post-war government policy allowed makers of jams one extra ton of sugar if the resultant jam was to be sold for export. Gordon's response was, typically, proto-Tebbit: "I went to the US in the depths of winter and hauled a bloody great bag of samples around Buffalo - Buffalo, for God's sake - who the hell wants to go to Buffalo? While I was there, I discovered that new word 'marketing' - invented by a Scottish professor at Harvard, of course - after which we no longer simply made good things and hoped to sell them. We found out what the market wanted first." Baxters' chairman pauses ruminatively. "You know, when I got back, a family friend - bank director, peer of the realm - came to lunch, and actually said, 'But Gordon: what is marketing?' That was why so many family firms disappeared in Britain, like snow off a dyke."
Now 74, Gordon's assiduousness as a marketeer persists. When he and his wife, Ena, were in the US last year, CNN rang and asked them to take part in a cookery show. "I donned my kilt and drove 160 miles," hoots Gordon recalling it. "That programme went out to 35 million people. In the end, the presenter said, 'Gee, Gordon, this is great soup; not like Campbells'."
It is of such coups de soupes that Baxters' success has been born, and the condition appears to be infectious rather than congenital. The firm's all-too-probably-named marketing director, Bill Brand, Baxterishly points out that Baxters now actually sell more soup in the UK than the aforementioned Campbells (10% of the extant soup market, as opposed to Campbells' 9%), which is, in itself, something of a marketing triumph.
In these foodie times, tinned soup can not, even in the argot of the most optimistic marketeer (or, indeed, anybody else) conceivably be described as "sexy". Nonetheless, Baxters is more than holding its own in a market where one single product - viz, Heinz's omnipresent Cream of Tomato - has a 25% share. This it has managed, a la Stella Artois, by tenaciously marketing itself as a "premier" product. The tinned soup market as a whole has, says Brand, stayed static over the past three years; but Britain's premier soup market, has grown handsomely, and Baxters is now in the felicitous position of having 75% of this market.
Having reinforced its niche, Brand is now intent on establishing similar niches elsewhere. With assiduous care, the firm has targeted the newly-united Germany as a likely taker for its premier soups - the correct national recipe of disposable income and unsaturated market - while the sweet-toothed but non-productive French are seen as likely takers for its jams and preserves, France's potagistes already apparently being well-served.
The obvious problem with this elitist strategy is that it might have an inhibiting effect on long-term growth. Much of Baxters' success lies in its family mystique. Ena - Mrs Gordon Baxter - for example is reputedly responsible for many of the firm's most successful recipes, tried out first in the family kitchen. (In fact, Baxters now boasts a highly scientific experimental kitchen and research laboratory, run by a chef named - stop your tittering - Robert Bruce). As Gordon Baxter delights in pointing out, "You can find Mrs Baxter in the kitchen. Where is Mrs Heinz? Collecting French Impressionists."
Given too much output, however, the time must inevitably come when the soup-eating public realises that Ena cannot possibly be mortally responsible for the 700 tons of produce that shifts through Baxters' cathedral-like warehouses every week. Nor will Gordon Baxter's highly successful marketing technique - customers are known as "friends" - survive too much growth, although he computes that the firm could be twice its present size before this happened. Common-sense also suggests that a product-line based on such delights of the temps perdu ecossais as tinned grouse in claret will not brook too much vogueish horizontal expansion, though Brand hotly denies such imputations. "Our vegetarian soups took 16% of the existing premier market from a standing start," notes Brand. "When we asked customers to draw our vegetarian soup cans, they still came up with stags and tartan, which suggests that our brand-image is more than strong enough to cope with innovation." Certainly, the firm cannot be accused of playing a safe game: among its more exotic new lines are Guava, Melon and Passion Fruit Jam and a Mixed Bean and Pepper Soup. The latter has, not altogether surprisingly, met with a lukewarm response from the soup-supping public, and, says Audrey Baxter, will probably be withdrawn. "Our business is run with set targets", she notes, tersely. "If it doesn't hit, it gets de-listed". In addition, all Baxters' goods now bear their calorific and dietary-fibre details, and the entire range of preserves was recently re-launched with a lower refined sugar content, to no apparent harm.
Sensitive as ever to the lucrative export market (up 25% in the last 12 months), Baxters keeps a weather eye on international food fads, and reacts accordingly. "We make a soup for Japan that you just wouldn't eat," says Brand, bluntly. "No salt. Now the Americans are insisting on a nil fat content, so we'll be looking at that seriously."
Another potential area for permissible growth is in the field of food services, known to firms without three royal appointments as "catering". Masterminded by Michael Baxter, this division at the moment accounts for rather less than 10% of Baxters' total turnover, in spite of churning out a massive 27 million mini-jars of jam a year for customers who include British Airways and the Waldorf Astoria. Again, Michael Baxter is convinced that extending this association with catering to include soups would not damage the firm's precious aura of exclusivity, pointing out that many chefs already serve up Baxters' goodies, laced with extra cream or sherry. "Whether they buy their soup in 15oz cans or three lb ones is neither here nor there," retorts Baxter III.
This old-newness, characteristic of Baxter marketing, is reflected in a three-year, £7.5-million capital investment plan in plant and machinery, aimed at both expanding the firm's potential output and at producing this output in a more saleable form. (A new palletiser for example, will pack tins in batches of eight rather than 12, responding to demands from inventory-sensitive supermarkets.) The Baxter faithful, doubtless picturing Ena in her pinny stirring a copper saucepan on an Aga, may well be disappointed in the new factory, but their bottled Beetroot - Baxters are the UK's single largest players, with 27% of this particular market, too - will be more plentiful as a result, new Disney-like lines filling up to 1,800 bottles of the stuff a minute (enough, it must be said, to give all but the most hardened beetophile bad dreams). And for those who hanker after the old ways, the firm's admirable failure rate of somewhere under 0.5% ("and we have an active team working on reducing that by half", notes Audrey) is still maintained by a Baxterial Thursday morning executive tasting, the entire clan sipping genteely at Cock-a-leekie in search of rogue flavours. Life at Fochabers is not all cakes and ale.
Given the times, a £2.5 million-a-year, three-year expansion scheme may not seem an altogether felicitous choice of corporate strategy, but Gordon Baxter's atavistic money-in-the-bank line has, undeniably, stood his firm in good stead. (His one-time merchant banker daughter comes in for good natured paternal joshing on this score). "The recession has certainly, shall we say, sharpened our wits," admits Audrey. "We've had to make old machinery work, and" - a certain steeliness enters her gaze - "we've had to squeeze suppliers, although we've done it honourably, of course. But what we need in the short-to-medium term is, of course, to speed business up, and that's what we're concentrating on at the moment".
What will become of this most emphatically familial of family firms in the longer term remains a moot point, though Gordon Baxter is feistily sanguine about the answer. On his office shelves, fine bound in red or blue leather, are the famous six volumes of letters he has received in the past 40 years, containing - at last count - some 168 offers to buy his firm. Blue chip bidders include everyone from Argyll foods to Heinz itself. The clan chief is particularly pleased with an offer from the head of a well-known fish paste manufacturer, "an old friend": Baxter's reply feigns regret at having to turn the offer down, but suggests that the writer "will leave a word with his executors". The other 167 have also all been turned away.
As might be expected, Baxter's response to suggestions of flotation is also excoriating - "P/E earnings and crap like that, little boys dancing up and down who I wouldn't give a job to. The City of London pressurises companies into short-term answers" - and he insists that Baxters "will remain independent in my lifetime, and, from what my children say, in their lifetimes too". (Just in case, trusts set up by Baxter ensure that any equity coming onto the market has to be sold back to the family). That does not, of course, answer quite all the questions, others being which of his three heirs will succeed Gordon as clan chief, and whether their views will tally with their father's on matters such as corporate debt. ("All our expansion is paid for out of retained income and profits, which means that all our decisions can be taken by us, around this desk," thunders Gordon Baxter. Whether this debtless approach will continue to appeal to Audrey Baxter, ex-Kleinwort Benson as she is, remains to be seen.) In any case, Gordon shows no signs of handing over any reigns just yet, insisting that he is not going anywhere until he can entitle his takeover-bid-book Two Hundred Not Out.
Charles Darwent is a freelance writer.