NFT Distribution celebrates the 25th anniversary of its formation this year – and the 2nd anniversary of its buyout from Northern Foods. Since its formation, the business has become established as a leading player in the primary chilled distribution market. Now it is independent, the challenge is to exploit the opportunities and drive growth.
Chief executive David Frankish, who has been with NFT since 1985, says Northern Foods had been happy to own NFT but was not interested in major investments to grow the business.
“I knew Northern would never allow me to develop the business the way I wanted to,” he says.
The decision by Northern Foods to sell off NFT brought in bids from trade buyers as well as private equity houses – in the end the business went to Phoenix Equity Partners which specialises in UK mid-market companies and also an investor in Palletways.
The company came into being in 1979 when Northern Foods set up a small distribution operation, Dronfield Foods, to consolidate Northern Foods Dairy product and deliver to Sainsbury’s stores in the Midlands.
Today NFT delivers more than 850,000 pallets of chilled food each week, travelling to almost every UK retailer every day. The fleet contains some 330 tractor units and 415 refrigerated trailers. As well as Alfreton headquarters, the company has depots at Bristol, Crick, Manchester, Penrith and St Albans.
The core of the business is the primary chilled distribution network. On top of that NFT has a secondary distribution operation for Sainsbury’s at St Albans along with a bespoke operation for Asda at Crick.
Sales have reached £115m and Frankish reckons NFT has about 30 per cent of the primary chill market, making it market leader in the sector.
It’s a business, he is keen to grow. “We are market leaders in chill but with the cost pressures on the industry, volume matters even more. To be more efficient in the primary chill market requires greater volumes.”
As a result, he says, there is likely to be further consolidation in the market. He also sees opportunities for cross-network synergies. While the major supermarkets are unlikely to consider working together to improve supply chain synergies, there is, he reckons, an opportunity for a “white truck” operator to offer cross-network services that maximise utilisation and provide economies of scale at the same time as delivering excellent service.
Frankish has only been able to develop his growth plan relatively recently as the immediate task following the buyout was to establish all the functions previously carried out by Northern Foods centrally. This included separating the IT infrastructure as well as migrating finance, payroll and HR systems.
So investment is now a priority for the business. It has already spent some £2m on its IT systems since the buyout. It plans to spend some £30m over the next decade upgrading facilities and investing in new facilities. On top of that it has earmarked some £2m a year in vehicle investment.
Perhaps the most visible example of this commitment to growth is the plan to open a 225,000 sq ft facility at DIRFT to meet the demand in the chilled market for pick to DC services.
It is currently finalising the deal and expects to be able to offer this service from DIRFT early next year. Not all the space at the new site will be used for chilled products and NFT is working on other opportunities.
Frankish is particularly keen to develop business in the produce sector where the company has already started to pick up work.
Last year NFT won a two-year contract with Manor Fresh to distribute both their organic and conventional potatoes and vegetables to Marks & Spencer. This contract involves NFT transporting around 70,000 trays per week of fresh produce from the Manor Fresh site at Holbeach to the regional distribution centres of its customer M&S.
“We have got realistic business plans to increase sales to some £160m by 2011,” says Frankish. “The opportunities are there.”
David Frankish is chief executive of NFT Distribution. He started his career as a trainee accountant with the British Transport Docks Board, which was later renamed Associated British Ports.
Frankish moved to Northern Dairies to develop his career further.
1985 Frankish moved over to join NFT Distribution division.
1991, Promoted to finance director of NFT Distribution.
In 1995 the NFT business was split with the milk distribution business being floated off with Express Dairies. The existing managing director opted to go with that business and Frankish was asked to take over as managing director of the remaining logistics operation.
2006 Management buyout of NFT by team led by David Frankish.