Monday 14 October 2019

Bakehouse cooks up plans to raise €10m in funding

Drogheda-based biscuit maker considers options as it eyes expansion and a possible second production line

How the cookie crumbles: East Coast Bakehouse founders Alison Cowzer and Michael Carey are planning fundraising to expand the business. Photo: Jason Clarke Photography
How the cookie crumbles: East Coast Bakehouse founders Alison Cowzer and Michael Carey are planning fundraising to expand the business. Photo: Jason Clarke Photography
John Mulligan

John Mulligan

East Coast Bakehouse, the biscuit maker established in 2015 by Michael Carey and his wife Alison Cowzer, could raise more than €10m in funding next year depending on how fast its business expands.

Speaking to the Irish Independent, Mr Carey said that the business, which is Ireland's only commercial-scale biscuit maker, remains profitable and that it is eyeing opportunities across its own brand as well as contract manufacturing.

About €23m has been invested in the Co Louth-based business, including €7.5m in equity. Mr Carey and Ms Cowzer retain most of the equity in the business, but a few heavyweight backers also have small stakes.

They include Donard Gaynor, a former executive with US drinks firm Beam; Patrick Joy, the founder of Co Louth-based Suretank; Laurence Shields, the founder of LK Shields solicitors; and Stephen Twaddell, the former president of Kellogg Europe. Enterprise Ireland has also invested in the business.

"We're constantly looking at what the next phases are, but we're reviewing our options in terms of the next round of investment," said Mr Carey.

"Subject to opportunities progressing, it's most likely in the first half of next year before we do anything," he added. "There's a whole range of sources of funding that could form part of that solution."

He said that could involve additional bank funding, or finance via an Employment and Investment Incentive Scheme, for instance.

Mr Carey added that how much finance East Coast Bakehouse looks to secure will depend on the "scale of opportunities" it's presented with.

"It could be from a couple of million, going to double figures of millions," he said, adding that expansion could include installing a second production line.

He said he and his wife would be unlikely to sell a stake in the business at this stage, but that some additional equity funding could be considered.

Mr Carey also said the firm has passed the breakeven threshold, after generating a €3m loss in its last financial year.

East Coast Bakehouse employs about 50 people, and up to 75 depending on output.

Mr Carey is the former chief executive of Jacob Fruitfield, which was sold in 2011 to Valeo Foods for €80m. Mr Carey made an estimated €16m from that sale. He's also a former chairman of Bord Bia.

Co-founder Alison Cowzer is the company's marketing and innovation director. She previously worked for L'Oréal, and was an investor on the TV show Dragon's Den.

Earlier this year, Mr Carey said that East Coast Bakehouse was generating annualised revenue of about €8m. In the current financial year, it's thought the figure will have risen considerably.

The company focuses on selling biscuits under its own East Coast Bakehouse brand, as well as manufacturing own-label biscuits for retail multiples, and contract manufacturing for other clients.

The latter comprises about 45pc of revenue, with own-brand sales making up 40pc and own-label the remainder. Mr Carey said he hopes to expand sales in all three categories.

It exports its own-brand biscuits to 26 countries, with the UK accounting for close to half its total revenue.

Mr Carey said Brexit is a "huge issue" for the company, but that he remains optimistic regarding opportunities for the business in the UK.

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