Big Interview: Paul Young, CEO, Kitwave Group
One of the lesser-vaunted members of FWD, Kitwave Group may be an unknown quantity to some, but after being listed to trade on the London Stock Exchange, CEO Paul Young says that’s all about to change
For those who aren’t familiar, what is the Kitwave Group?
As a business, we have national coverage from a frozen and chilled product point of view. We don’t have quite the same coverage for ambient-based products, such as snacks, chocolate and soft drinks. That tends to be a bit more localised, but over the next five years that will get national coverage as well because we have the logistical network to allow delivering it nationally, we just have to put that product base together.
We started as a tobacco and ambient supplier, but we’re now a complete offering: chilled, frozen, fresh, butchery, alcohol and a small amount of tobacco.
Tobacco isn’t a product we think is right for us, so over the years we’ve backed away but backfilled it with a full product offering.
Kitwave may not have had a big voice in the past but you have a large network…
We have 26 sites and, of those, six are main hubs and they distribute product to the other 20 depots. The depot network is all about ensuring we can give our customers either same- or next-day delivery; that’s what we aim to do. The depots are all about allowing that to happen.
What you’ll see as we expand and acquire businesses – because that’s partially what the IPO (Intellectual Property Office) is about – is that they will move geographically south or north. We’ve got no problems with where a depot sites because we’ve got a full IT system backing us, so it doesn’t matter if it’s here in the north, in Essex or Sussex. Location is not important because of our hub network.
You mention the IPO and Kitwave’s admission to trade on the AIM London Stock Exchange. What’s the thinking behind this?
We approached this, initially, 20 years ago, but it was probably a bit too early in our history. We approached it again just prior to Covid coming along, then it did and we put it on the backburner. Because we knew some of our business was going to be restricted during this time, we used the time to look at how we could make our business better. Can we look at improving our IT systems, our website, our product range, our logistics? We did that throughout Covid and when we saw the market coming back last summer, that said to us that when we come out of Covid, this is going to come back extremely strongly.
It made sense to do it in January with the vaccine programme running ahead of itself, so we got the finance in place from the IPO and paid the debt we’ve built up over the past 10 years by provisions to effectively give ourselves a foundation to move forward. In the next 5 or 10 years, it allows us to keep doing what we did in the past 10 years but do it faster, better and without a load of debt. We don’t expect to, at any stage as we move forward with acquisition, go back to the marketplace for traditional funding, we fully expect to do it all out of our existing cashflow.
Acquisition is a big part of Kitwave’s growth. What’s your strategy for that?
We’re extremely good at acquiring family run businesses. We don’t buy broken, distressed businesses, we buy good businesses and try to make them better. When we buy a family business, we keep that front end and the link between customer and wholesaler, but we give that company the benefit of being part of a group. The group acts as a bit of a link between them and the supplier, so we’ll get best terms and we can pass that on down through the line so the customer gets improved service. What we’re very careful about is that we’re a business that has built a reputation on range, delivery and availability, so we’re cautious of breaking our delivery performance – we’re not a price-led business, we’re not a cash and carry, we’re a delivered business for independent businesses and have been for 30-plus years.
How will you be pushing ahead with your acquisition plans?
It’s not a case of doing it and thinking, ‘great, there will be some really cheap opportunities for us to acquire’ because that’s not the Kitwave approach. There will, obviously, be opportunities, but we’re not looking for a cheap purchase, we’re looking for a fair purchase. We’re not a hostile buyer, we’re a friendly buyer. That’s how we’ve run our business and we’re not going to change our stance because it’s stood us in good stead.
Delivered wholesale has historically been a tricky nut to crack. How have you achieved this?
It’s how we built our business, so we did it organically. We’ve grown it by acquiring good businesses. So let’s say you acquire a foodservice business – you know it has built its reputation on ‘give me your order, we’ll get it to you the next day’. That’s what Kitwave is good at as we’re a nimble supplier. You build knowledge and as we’ve built our product range and acquired businesses, if there’s something new in there – such as chilled – we take our time to understand it and don’t go at it hammer and tongs or rush it so we’ve broken the customer relationship. While we’re a business that has grown, we’re not a risk-taker – we understand the market, the customer and the product.
What’s next for Kitwave, then?
The business will move so that Kitwave isn’t just known by suppliers but becomes known equally by our customers. We can assure the service they get from an HB Clark or Sterling Wright will be precisely the same and they’ll still have a relationship, but Kitwave will be in their mind. It’s using our name because it’s important the customers trust us too.
Our focus is independents and the fact we’re IPO-ing doesn’t change that. We expect to grow in scale and in the market sector we like and we see loads of space to grow in that market without changing the ethos and approach of Kitwave within. So you’ll see us grow in scale but not go away from our core customer base.
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