Food for thought: The story behind the success of Ella's Kitchen
Posted by Natalie Brandweiner in Business profiles on Fri, 16/12/2011 - 11:30
Paul Lindley's three characteristics of a successful entrepreneur
Passion: For your product, service or customer. People who set up a business just to make money will be less successful than those who have a real passion
With global sales of £60m over six years and a 14% market share of the baby food sector, Ella's Kitchen is one of the UK's fastest growing businesses. Founder Paul Lindley reveals why his daughter's eating habits inspired his brand and how he secured Sainsbury's as his first retail stockist.
"A financial person in training and a marketing person by experience" is how Paul Lindley defines his 16-year development from KPMG accountant to founder of Ella's Kitchen, an award-winning organic baby food company.
After seven years working in the world of auditing and accountancy, Lindley opted for more creative surroundings and landed himself the role of financial controller at children's television channel Nickelodeon. During the nine years at the company, he progressed to the role of deputy managing director and it was here that he developed his passion for children's health.
"Nickelodeon TV was all new in the mid-90s," explains Lindley. "It was quite an entrepreneurial environment even though it was owned by two big shareholders. The entire management team were in their late 20s and we were able to make decisions. It was exciting and creative, and it was here I learnt about children and marketing.
"I had a number of ideas for new businesses but Ella's Kitchen was the one I felt confident enough about to hand in my notice and leave my job. I felt that if I didn't it I'd be more disappointed than if I did do it and failed," he says.
Ella's Kitchen
Despite having no professional experience with food, Lindley left Nickelodeon in 2004 and gave himself two years to get the concept of Ella's Kitchen together and the business off the ground. The lightbulb moment for the company was sparked when his two-year old daughter, Ella, stopped eating certain foods without reason, a scenario common in the kitchens of many parents.
Lindley first turned his attention to the concept of packaging and created a plastic 'pouch pack' of healthy fruit, in contrast to the traditional glass jar design for baby food. In terms of market reseach, he had his target consumer living with him! Lindley named his first product 'The Red One' after asking his son which one he preferred. Baby food formed the second range, with each flavour produced from an unusual combination of ingredients, such as pumpkins, blueberries, apples and sweet potato, to entice both imaginative parents and help develop the tastes of young children.
Tenacity: Constantly picking up the phone when you get no for an answer or your emails aren't responded to and not giving up.
Creativity: The established corporate ways of things have either been done before or can't be done so think creatively to get around potential problems.
Over his self-imposed two-year deadline, Lindley developed the products and packaging, underwent a mock production process at the University of Reading, worked with experts in food regulation and law and then began selling.
"I didn't want to just start off selling in really small farm shops and delis," he explains. "I started Ella's Kitchen because I wanted to make a difference to children's health and enable them to develop a healthier relationship with food. To do that I needed to launch in a supermarket as the volumes I wanted required that sort of distribution."
Before the first products were finished, Lindley approached the major supermarkets. At the same time, the former Nickelodeon deputy MD struck a revenue share deal with the channel to receive free advertising, a move that proved invaluable to the brand's success.
"I convinced the channel that our adverts could keep children watching through commercial breaks and I knew that the time I wanted the ads placed was in a slot when that they wouldn't necessarily sell all of the available advertising space," says Lindley. "From Nickelodeon's point of view it was selling a healthy product that would address some of the criticism they were receiving about contributing to children's poor health."
Lindley also ensured he built his company on strong financial foundations: "I made sure the cash flow in the business worked by having my customer pay me before I paid the supplier so I didn't have to bear the risk of cash tied up in stock," he explains.
The entrepreneur approached Sainsbury's and the offer of a free TV advertising campaign. The retailer agreed to stock Ella's Kitchen products in 350 stores for 12 weeks on condition that no other company did the same. The pilot worked and the business has grown extensively over the six years since. In 2011, the total baby food market grew by millions and Ella's Kitchen accounted for 84% of that growth, Lindley claims.
Based in Henley-on-Thames, the company now employs 15 staff and has won several awards including two prizes at the National Business Awards.
Exporting
Ella's Kitchen expanded internationally in 2009 when Lindley re-mortgaged his house to raise the £200,000 needed to launch overseas. After extensive research into the region's consumer market with the help of government-funded agencies UKTI and the now-defunct Food From Britain initiative, Ella's Kitchen launched in Norway and Sweden where the company now holds a market share of 20% and 10% respectively. The firm now has a presence in eight international markets including the US.
"For any small businesses, even at this time of our economic cycle, exporting should be considered," explains Lindley. "Entrepreneurs should investigate the possibility and try to export to areas of the world where there is substantial growth.
"For example, Brazil has just become the seventh largest economy in the world and had a GDP growth of 7.5% last year. The last time the UK had a 7.5% growth was in the Industrial Revolution. There's a massive demand. That's huge, huge growth. Brazil has its own challenges of taxes and legal regulations but there are many markets growing around the world; most of Africa is growing at double digit growth," he says.
Tax relief
Lindley is passionate about encouraging small British businesses to export and believes the government could do much more to help. "I thought the chancellor's Autumn Statement was woefully lacking in any constructive, thought-through strategy for SME growth," he says.
Harking back to his days in accountancy, Lindley has spent the past year lobbying ministers to consider his idea for a export tax relief for small businesses. His 'consumer excellence tax relief' concept is based on what he sees as the government's acceptance of a knowledge-based economy and vision for the future. He argues that to create that knowledge, Whitehall must maximise the country's intellectual property, such as through patent trademarks.
"There's already a set of tax reliefs to encourage British companies to develop patents and innovate but there's nothing to encourage the exploitation of trademarks and the development or maximisation of the value of trademarks. Britain is very good at developing brands, especially SMEs, of which Ella's Kitchen is a great example."
To properly exploiting a brand trademark, the entrepreneurs advises that keeping the customer at the centre of your operations is key. Understanding what your customers want can add value and allow companies to successfully compete with larger competitors. However, small businesses tend to shy away from the investments needed to collect the market data due to the expense, he says.
"All those bits of investment are often neglected because entrepreneurs tend to concentrate on immediate sales but they're the things that really support a company's development and underpin a brand," says Lindley.
"My proposals are being considered by the government who I hope will introduce them if ministers really want more British SMEs to become global brands."
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