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Thursday 21 August 2014

60-Second Pitch: Brand growth? It's a piece of cake

Why you should invest in Farmbake

Louise McBride

Published 08/06/2014 | 02:30

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Tasty Profits: Alan Divney of Farmbake with some of his delicious products. Photo: Tony Gavin

Travelling around the boreens of Mayo isn't exactly where you'd expect to learn about business. However, this is where Alan Divney, the managing director of Farmbake, started to learn the tricks of the trade.

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Mr Divney's grandfather set up a small travelling shop in Mayo shortly after World War II.

"I remember my grandfather collecting me from school in the summers and taking me out in his travelling shop around the boreens of Mayo," said Mr Divney. "Not only was that magical as a child, it taught me how to deal with customers. I learned that the customer is always right – and that people respect honesty. If you're going to succeed in business, customers have to trust you."

The travelling shop was vital for many people at the time.

"It was a very rural area and a lot of people couldn't travel," said Mr Divney. "We went to the customers."

It's no surprise then that Mr Divney, who is now 46-years-old, is running a cake distribution business.

Mr Divney set up the business with his father Jim in 1987.

"I left school around that time and decided to go into business with my father," he said.

He has run the company with Jim, who is now 71-years-old, since. "There's no chance of Jim retiring," said Mr Divney.

The business, which was originally called DDL Cakes, bought cakes from local bakeries – which were then sold to small rural shops across Leinster. The Divneys believed they could build a solid cake business, despite the economic climate.

"In the late Eighties, things weren't that great economically," said Mr Divney. "But we figured that people will always treat themselves."

Their hunch was right. The family business, which has since been rebranded to Farmbake, started out delivering cakes in one van. It now has 22 trucks and delivers cakes to almost 2,500 stores around the country. Over the last three years, sales of the Farmbake brand have increased by almost 30 per cent.

The launch of the Farmbake brand of cakes in 1989 was key to the development of the business, according to Mr Divney. "When we had our own brand, it meant we could go to some of the multiples and deliver around the country – rather than in Leinster only. We started to supply Spar and Londis around 1990. Today we're with Mace, Gala, Day Break, Costcutter, and Eurospar."

Farmbake has also just signed a contract with Tesco to supply its cakes to 28 of the supermarket chain's stores across the country. The company believes the contract could generate annual sales of over half a million Farmbake products.

The family's long history in the grocery business has no doubt also helped it succeed. There are records on Mr Divney's mother's side of a grocery business in Castlebar which dates back to the 1700s. As well as running a travelling shop, his grandfather ran a grocery-pub business.

"Having a family business background, I always intended to be self-employed in one way or another," said Mr Divney. "It was in the blood to do my own thing."

Some of the most popular Farmbake cakes are its almond fingers, assorted queen cakes, bakewell tarts, swiss rolls, mini battenbergs, fruit cakes and apple turnovers.

So what makes Farmbake cakes stand out from the countless others in the shops?

"We've always concentrated on affordability and quality," said Mr Divney.

As well as delivering its own cakes, the company distributes cakes for other companies, such as Mr Kipling, Cadbury cakes, Gateaux, Coolmore and Balconi. The distribution of these brands make up about 40 per cent of the company's business – and this could grow.

"I believe cake sales will continue to grow," said Mr Divney. "People have a tendency to treat themselves. Ireland is known as a nation of cake eaters – we have one of the biggest sweet tooths in Europe."

Farmbake, which has been based in Naas, Co Kildare, since 2011, employs 32 people. It might well employ more – if Mr Divney's ambitions are realised. "We are always on the lookout to buy companies in the cake business," said Mr Divney.

The Mayo man has seen big changes in his business over the last 27 years. "It's all rules and regulations now," said Mr Divney. "Gone are the days of the docket book. All of our vans have handheld devices now for stock control and delivery dockets.

"Everything is automated. There are massive benefits to technology however. We can tell exactly what stock we have, where we have it and what has been sold."

Sunday Indo Business

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