Case Study: MacKays of Carnoustie

This case study covers the following points:

 

Mackays of Carnoustie

 

Introduction to MacKays of Carnoustie

Establishing a effecient supply chain for perishable ingredients was always going to be a challenge, but MacKays realised from an early stage, in order to produce top quality products you have to ensure the best ingredients go into the mix. This has meant working closely with farmer suppliers and helping them to understand the demands of the consumer on the whole chain. Mackays Ltd is a highly successful food business that was purchased from United Biscuits (UB) in 1995 by Paul Grant, the Managing Director.  At that time, it produced jam for the UB group in addition to contract manufacturing for other jam and preserve makers.  “When I took over, it was a business producing a commodity product.  In the first five years it was learning about marketing opportunities and surviving the star-up phase,” said Paul.  “We realised from an early stage that to thrive, Mackays had to differentiate their range and where possible target premium sales through both supermarkets and the independent retail trade.”  This is now achieved with two brands.  Mackays the everyday premium brand marketed through supermarkets and Mrs Bridges, a deluxe range of recipes marketed through independent retailers such as garden centres, department stores, visitor attractions and hamper companies.

Three components – reputation, artisan manufacturing and product quality contribute towards the premium proposition.  Firstly, jams and marmalades are associated with Dundee.  It has been made in the area for over 200 years and the links with that manufacturing heritage are strong.  Secondly, Mackays utilise a traditional method of manufacturing using copper bottomed open pans with the slow boiling method to make their jams and marmalades.  This gives the products a distinct homemade taste and flavour.  Finally, quality is paramount and only the finest jam-making Scottish berries grown in Tayside are used in the preserves.  These three components are the corner stones of the brands and the use of local fruit in particular enables Mackays to feature Scottish ingredients in both their premium ranges. 

The Commercial Drivers for Collaboration in the Chain

Scottishness is another significant part of the overall proposition offered by Mackays.  In the UK domestic market, the inclusion of Scottish ingredients allows Mackays to draw attention to their use of local suppliers, a feature that is highly valued by consumers.  In the export market, the Scottish brand carries a significant cachet and using local fruit allows Mackays to reinforce this message in an authentic and meaningful way.

When it comes to the quality of inputs, Mackays have different parameters for different berries but the overriding factor is cleanliness, freshness and taste.  Strict limits are set for admixture to prevent any problems associated with contamination from leaves, stems and other potential sources such as straw.  As Paul explained, “In the early days, we found that farmers were not aware of how critical it was that we received clean fruit.  They assumed that because we were making jam where the size and shape of the fruit was less important than for the fresh market, they also assumed that other standards were not as crucial.”  This meant that Mackays sometimes had to spend a significant amount of time inspecting and cleaning the fruit to make sure it was up to an acceptably high standard.

Mackays realised that the only way to resolve this situation was to communicate directly with the farmers and explain the benefit of correct berry preparation in terms of specifying exactly what they wanted and when it should be delivered.  Consequently farmers would receive a better price or avoid rejections.

“The development of a collaborative approach has meant that the situation is now very different from the early days” emphasised Paul.  “Farmers are now acutely aware of the standards that we must have.  Much of this is due to the trading relationships that have been established with the growers and our decision to appoint Sandy Adamson, our own expert, ‘literally’ in the field, who helps manage our fruit procurement on a day-to-day basis.” 

What are the Key Working Relationships and how are they Maintained?

Sandy is an independent fruit consultant who works on behalf of Mackays.  He has bi-monthly review meetings at the factory for planning and to receive feedback on any information concerning the performance of fruit in the jam making process.  He is also in regular phone contact with the factory and the farmers during the picking season and deals quickly with any issues that need to be resolved.  All the information Sandy receives is fed back to the farmers so that they are fully aware of future needs of the business and of how their fruit is performing.  In addition, Mackays have an open door policy with respect to their farmer suppliers and many have visited the plant.  This helps them understand what is required and what systems need to be in place on the farm in order that the correct quality is delivered.  The open door policy works both ways and Mackays also carry out a technical visit to all their farmer suppliers.  This provides an opportunity for Mackays to understand the challenges facing the farmers and the chance to inform them of what is happening at the factory.  Out of these meetings, joint solutions have been found to improve product quality and consistency.

What are the Collaborative Business Propositions and Targets Agreed by the Chain?

Like Paul Grant, Sandy is keen to emphasise the importance of fruit cleanliness.  Initially t  he berries are inspected in the field prior to being packed into containers for onward transportation for freezing and storage.    Every safeguard is taken to make sure that the produce is suitable for processing and Sandy visits farms on a daily basis when they are picking fruit to keep an eye on the harvesting and grading process.  The procedures are practical and straightforward and designed to deliver the finest fresh quality processing berries. 

Sandy emphasised, “It is important that the fruit destined for Mackays is of the highest quality, but at the same time, it has to be recognised that the standards for the fresh market are different to those of the processing market.”  Processing fruit has to be full of flavour, it must boil well and it must be clean.  These are critical factors for Mackays and Sandy and the farmers work very hard to achieve them.  At the same time, everyone in the chain knows that the quality of a natural raw material varies from season to season and while there is a specification for the fruit, all parties develop a common understanding of what needs to be done to maximise the quality of the fruit sent to Mackays.  The approach is flexible and practical meaning that Mackays obtain a product that is terrific to make into jam while at the same time the management of the quality systems are not overly burdensome and costly.  This process ensures the fruit is the best quality it can be but that it is also competitively priced.

 

Examples of the Results of Collaboration

From the farmers’ perspective, the opportunity at Mackays has a number of advantages.  The business has grown rapidly.  In 1995 Mackays used approximately 30 tonnes of fruit and this is forecast to grow to 350 tonnes in 2007.  This provides local farmers with another outlet for hand picked fruit, which may not be suitable for the direct consumer market, due to size or shape and adds to the diversity of opportunities that can be serviced.  This helps strawberry growers in particular to:

 

The growth in demand is also of particular interest to farmers that grow machine picked berries specifically for processing.  Originally the machine picked fruit was exclusively raspberries but new opportunities are now developing for other berry fruits such as blueberries. 

Long Term Thinking and Mutual Support

Looking forward, the future is exciting.  On the basis of previous sales growth and their use of local fruit, Mackays have secured a Processing and Marketing Grant from the Scottish Executive to help meet some of the costs of building a new processing factory at Arbroath.  Paul said “The grant was very useful in a number of way as in addition to helping to finance a significant proportion of the construction costs, it also helped us secure additional funds from the bank.  Without the grant, our plans would have been nothing like as ambitions, we would have had to put back starting the project and reduce the size of the plant.  This would have limited our processing capacity and growth potential and thus our ability to utilise higher quantities of locally grown fruit.” 

Innovation, Value Add and New Product Development

In addition to the jams, Mackays are also looking to expand the range of chutneys and relishes which form an increasingly important part of the Mrs Bridges brand.  Many of these products require onions and other vegetables to be included as ingredients and Paul is very keen that where possible, these are sourced locally.  He said, “It increases the ability and opportunities to influence growers when produce is grown on the doorstep and that helps to build our confidence.”  To do this Mackays are looking forward to building new collaborations with farmers to support the important features of their highly valued consumer brand.

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