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Volume gives CLF its buying power
Wholesale distributor CLF Distribution is 120th on the Solent 250 and based in Southampton. The company has moved five times since it was started in managing director Robin Holiday‘s garage 15 years ago and currently stocks more than 17,000 products. Sue Hughes reports
A national logistics expert when it comes to supply, this company has flexed its muscles when embracing state-of-the-art IT developments, something which has underpinned its rapid and highly-successful growth. CLF is the leading UK wholesaler of premium products including sports nutrition, organic and health food products; vitamins, minerals and supplements; personal care products; household products and now also chilled and frozen products.
Selling purely to retailers, managing director Robin Holiday is optimistic when looking three to five years hence: “We‘re seeing growth in our sector, especially in categories such as gluten- free and products for specific dietary needs or allergy sufferers. Because of the low margin nature of wholesaling, I think we‘ll see some consolidation. Retailers need to have more confidence; it‘s been somewhat static but we‘ve won new clients recently, the UK‘s largest fully- certified organic supermarket Planet Organic and health shop Revital.
“Supermarkets have neither the space nor customer volume to carry this range of products well, but much of the younger generation understands the sports nutrition sector and is interested in fitness, despite the multiple distractions of technology. A high-protein lifestyle is frequently featured in the news and we have a body conscious generation – for men, a good physique is desirable, whereas women are more diet conscious.“
Offering a daily delivery service from its purpose-built and extensive warehousing facility on the Nursling Industrial Estate, CLF successfully provides continuity of supply across more than 17,000 products from some 800 leading brands.
Growth has occurred through acquisition. Its unique selling point in the wholesale sector is 100% accuracy in picking products. Holiday explains: “The pick and pack scanning has driven the business forward. We were an early adopter of IT and it‘s only grown with regard to efficiencies. The current system has been in place since 2005 and allows us to change with the needs of the business. It monitors key performance indicators across the company, from employees to profit margins, and we‘ve seen more and more retailers start to operate online.“
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Holiday cites “a whole raft of legislation from Europe“ as an overall issue which holds back business: “Label changes, for example, which were formerly covered under the Food Standards Agency or Medicines and Healthcare Products Regulatory Agency (MHRA) – we have so many European countries with different dosage limits for vitamins, let alone cultural differences and much more besides. Previously we were doing very well under the FSA and MHRA, so you won‘t be surprised that I‘m an advocate for pulling out of Europe.
“From a UK standpoint too, employment law really needs help. Every company‘s ethos should be ‘a fair day‘s work for a fair day‘s pay‘, not the current tribunal culture. I undertake a fair amount of lobbying, about products and employment law. The latter affected us in one case when we relocated from Downton in Wiltshire. Employment law penalises companies for moving and expanding because the Government doesn‘t allow flexibility. However, both before and since moving to Southampton, we recruited local staff and there‘s a good local pool.“
Holiday, a keen motorcyclist, says to take some time off is a personal goal: “Business is settled and although we have plans to extend our reach and open a warehouse in Northampton, it‘s more important to consolidate business here in the current climate.
Purely UK-based, CLF is the dominant wholesaler in the UK and committed to supporting retailers. New chilled and frozen lines are doing well whereas the 70% sales figure for sports nutrition products last year has fallen to 40% in 2013, following the introduction of VAT.
“You don‘t achieve buying power until you get volume, which makes our sector a tough nut to crack,“ he says. “You need value for customers, so we built up our food products one brand at a time.“
Having recently refinanced through Santander, a bank which Holiday says is working to build its business in the SME sector, he adds: “It provided good leverage against the balance sheet and I‘m quite bullish about the market. We have purchased a fleet of vans at £250,000 to transport chilled and frozen produce within a six-hour delivery timescale to the customer‘s door and recently invested in new warehouse packing pallets, which are collapsable, provide better storage for different sizes of orders and are more eco-friendly.
There are 140 employees and the £30 million turnover is on course for £32m in summer thanks to new business wins. The management team is well established and incentivised by virtue of being minority shareholders, while a group pension scheme operates for staff.
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THE BUSINESS MAGAZINE – SOLENT & SOUTH CENTRAL – JULY/AUGUST 2013
“Unfortunately, the Government doesn‘t make stakeholder engagement easy, such as not engaging our sector in decisions such as VAT on sports supplements. There was no consultation. It will see the reverse of taxation income, devastating the industry and pushing people to buy from the USA because shipping is affordable – that‘s why we are aggressively growing food products.“
Food for thought Number 10? Or at the least healthy discussion.
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