Cake Decoration is a growing and global market with a spectrum of consumers from experts to beginners and a wide range of trade channels.

2018/2019 Performance

In a transitional year, the result for Cake Decoration was encouraging in that the division delivered a significantly improved underlying adjusted EBITDA performance, despite overall challenging consumer demand and trading conditions, control of overhead expenditure and the realignment of resources from Group to Cake Decoration.

At the overall market level, consumer demand for Cake Decorating products in the Company’s core market, the UK, was in slight decline at minus 1% year on year, but there was some improvement in the key seasonal trading period in the last three months of the year when market volumes increased by 2%.

In the UK, where all the division’s manufacturing facilities are located, sales in the wholesale and retail distribution channels were down on prior year with the decision of one significant customer in retail to move production in-house, accounting for a year-on-year reduction of £1.6 million in revenue, while sales within the manufacturing channel grew by 8%, and sales to the Company’s sister Company in the USA, increased by £2.4 million, reflecting increased customer demand and some limited re-stocking in that market.

Following the establishment of a USA-based warehouse, to fulfil orders for North America and an increase in customer demand, sales in North America grew by a healthy 22%. A review of the order fulfilment model for Continental Europe customers was also completed, resulting in the closure of the Brussels warehouse and office. Order fulfilment for Continental Europe customers is now handled by the Company’s main customer service and warehouse operation based in Liverpool. The change was well executed with the customer base retained and sales down by only 3% when compared with prior year, reflecting increased competition and some economic uncertainty rather than the change in distribution model.

A new line to produce convenience formats of Renshaw’s core product, rolled icing, was fully operational, delivering increased throughput and lower costs and a new soft icings plant became fully commissioned with the first orders for UK retailer own label frostings being produced.

An independent customer survey was undertaken, which in turn, led to a comprehensive review of the Company’s strategic plans. The survey acknowledged the strength of the Renshaw brand, its heritage and that for many customers it was seen as a “must stock” brand. The survey also highlighted the key areas that the Company needed to address to further secure its position in the market and grow. Principally these were in the areas of new product proposition development, customer service and the performance reliability of product. A comprehensive strategic plan and associated schedule of actions was drawn up to address each of the areas highlighted.

Related to the customer feedback, a review of the Company’s sales and operations planning process was undertaken with the help of a specialist consultancy. The resultant process redesign and associated structure changes have been implemented and are already providing customer service and inventory benefits.

Forward Plans

The business continues to implement its strategic plans, arising from the strategic review referred to above. These are focused on reducing reliance on the Company’s core product line, ready-to-roll icing, by developing a wider range of products within the cake decoration category. The products developed and made available will be rooted in genuine consumer insight and seek to address consumer concerns and needs in the areas of convenience, health, the environment and providing accessible inspiration. The Company’s marketing activities are also being aligned in one function and reorganised to support the revised strategy.

In addition to product and marketing initiatives, the Company is making progress in engaging with its key customers to provide a more consultative approach to the overall cake decorating category through the better use of bought-in market data, insight generation and application and digital media content.

The B2B division continues to see and capitalise on significant opportunities to leverage its long-standing industry knowledge and expertise to help cake manufacturers through the provision of reliable core products. It also continues to identify new customers for products such as caramel and mallow in rapidly growing emerging categories, such as the snack bar market.

Export growth is focused on North America where detailed strategies for three principal areas have been identified and recruitment is underway to ensure we have sufficient resource and expertise to implement plans. The US operation will agree closer distribution partnerships with key industry players throughout the year.

Following changes to the order fulfilment model for Europe, the business will continue to evaluate how it best serves its European customer base, seeking constantly to improve customer service and product availability.

Ensuring the supply of consistently high-quality product remains the key imperative for the Company; as a result of which there is now an active quality improvement programme across the entire business. In addition to continuous improvement and preventative measures, the programme involves acquiring the leading scientific understanding of the products manufactured by the Company to ensure it stays ahead of the competition.

Cake Decoration includes the following businesses:

Renshaw manufacturers sugarpaste, marzipan, soft icings, mallows and caramels and sells across a broad range of sales channels: mainstream and specialist retail, wholesale, foodservice and food manufacturing as well as export.

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Rainbow Dust Colours produces a range of edible glitters, dusts, powders and food paints, brushes and pens for the specialist sugarcraft sector.

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Renshaw Europe sells, markets and distributes both Renshaw and Rainbow Dust products across continental Europe.

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Renshaw Americas sells, markets and distributes both Renshaw and Rainbow Dust products across the Americas.

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