Delivered wholesale business Kitwave is now 35 years old and serves around 39,000 mainly independent customers.

Kitwave has opened a new distribution warehouse in Wakefield which will help the business grow its on-trade foodservice offering.

In February, the wholesaler acquired M.J. Baker, expanding the group’s activities into the southwest of England.

Ben Maxted, COO at Kitwave, tells Wholesale Manager what targets he has for growing the business.

Tell us about Kitwave – what product categories does the group supply and who are your customers? How many depots and delivery vehicles does the group have and how many employees?

Kitwave is a delivered wholesale business, specialising in the sale of impulse products, frozen and chilled foods, alcohol and groceries across the UK. Founded in 1987, we now have a direct sales force of 200 sales reps and over 1150 staff. Operating from 27 depots across the UK, our fleet of 430 vehicles supplies a customer base of approximately 39,000, mainly independent, customers, including independent convenience stores and foodservice outlets. Through our wholly owned delivery fleet, we are able to maintain our commitment of delivering service quality, on time and in full, achieving next day delivery if required.

What are your plans for the new distribution warehouse in Wakefield?

The new warehouse replaces our previous site in Wakefield, serving as the head offices for on-trade Wholesaler HB Clark, and will see the full integration of operations and staff from the Leeds depot. In total, 80 staff have made the move from the old Wakefield site and the Leeds depot to the new premises, with no job losses from either site.

The site, in addition to providing a space for coaching, training, and in-person meetings, will house our InFAMous Soft Drinks post-mix production facility from Leeds, allowing for a number of operational synergies. The move, only the third move in HB Clark’s 100+ year history, demonstrates how, across the Kitwave Group, we are continuously striving to achieve synergies and ways of improving existing processes and, in turn, improving our service to customers.

Will the move to the new site create new jobs?

The purpose built site is a key part of Kitwave’s infrastructure improvement plan which will give us further scale opportunities and the ability to grow our on-trade foodservice offering. We are immensely proud to be a large employer within the area and this will bring further employment opportunities.

What are the highlights from the group’s last financial results? What are your comments on the results?

In February, we were incredibly proud to announce a strong set of results for the full year ending 31 October 2021, a year heavily affected by COVID-19 lockdown restrictions and extensive closures within the leisure and hospitality sectors. The period was undoubtedly one of the most challenging in the Company’s history but our independent customers have proven their resilience by emerging with these challenges now behind them. Despite the difficulties, we were delighted to report impressive revenues of £380.7m, adjusted operating profit of £7.1m and £7.9m net cash generated from operations.

Our listing on AIM also represented a landmark corporate milestone for the Group, enabling us to pay back the Group’s existing debt, placing us in a strong position for life as a public company. We believe that trading on AIM will allow us to enhance the Group’s brand, drive sales and provide us with the platform to pursue our buy-and-build strategy.

One year on from the Group’s admission, life on AIM has started well. In our pre-close trading update announced in May, we reported a strong start to the financial year.

Has trading now returned to pre-pandemic levels?

With many businesses in the hospitality and foodservice sector forced to close or operate in a reduced capacity during the pandemic, we are delighted that the vast majority of our customers have managed to weather the storm and emerge from the pandemic strongly.

In line with this, we are pleased to note that all divisions of the business are now trading at pre-pandemic levels or better. In our recent pre-close trading update for the period ended 30 April 2022, we reported a robust first half performance and our belief is that full year results will be slightly ahead of market expectations.

What are your plans for the M.J. Baker business after you acquired the foodservice supplier?

Following its acquisition in February 2022, M.J Baker is being fully integrated into the Group and the business is performing according to internal expectations. The acquisition expands our activities into the southwest of England, whilst also helping to strengthen our growing Foodservice division.

What targets do you have for growing the business?

Having completed our first successful acquisition following the Company’s admission to AIM, we continue to identify and assess opportunities for acquisition that fit with our criteria. With the UK’s grocery and foodservice market highly fragmented, the Board believes that there is considerable opportunity for Kitwave to make acquisitions of smaller regional players that not only enhance our footprint in the UK, but also improve the quality of our service, in turn enabling the Group to consolidate market share.

Kitwave has an excellent track record of successfully acquiring and integrating businesses into the Group, with the acquisition of M.J. Baker representing the Group’s eleventh since 2011.

At the same time, growth of the business is being driven organically. This can be achieved through the strengthening of our product offering to customers, growing customer numbers, enhancing existing brand relationships and improving our service quality.

It is also imperative that we keep developing our infrastructure, not only in terms of our wholly-owned fleet and other operational synergies, such as through shared usage of sites, for example, but also our IT systems, to allow an improved sales journey for customers.

How digital is Kitwave as a business, and do you offer any IT support for your members e.g. ordering apps, online support delivery tracking?

Kitwave operates a fully integrated end-to-end ERP system from customer order to delivery. We are always looking towards the latest technology to innovate and drive synergies, lowering costs and improving processes. For example, our new Luton distribution hub utilises warehouse management systems alongside voice-picking technology which we anticipate will significantly improve operational and administrative efficiency. We have also launched a fully functional online solution for customers, through this we are able to further improve the quality of our service provision and drive cross-selling across the wider categories that Kitwave supplies.

In order to optimise customer deliveries, all vehicle journeys are planned using Paragon and tracked via our fully integrated EPOD solution. This maximises efficiency by increasing drop density and maximising route profitability.

Further to this, we ensure that our IT and sales rep staff are fully trained to deliver high-quality services to customers through our digital customer touchpoints, making the customer’s sales journey as easy and enjoyable as possible.

What promotional offers do you run?

We run a broad range of monthly promotional and web offers across the business divisions. Supplier engagement continues to be key in this offering and we continue to work hard with the brand owners to offer our independent customer base a market leading promotional calendar.

Which product categories that you supply are in growth and which are more challenging?

We are seeing growth across many product categories as all the business divisions return to sales levels at or exceeding pre-pandemic levels which is pleasing to see. Chilled and fresh continues to offer us opportunities to develop and grow our temperature controlled offering to independent customers nationwide.

How has the wholesale industry changed in recent years?

The resilience of the industry and the customers it serves has been the key to its survival over what has been a difficult few years during the COVID-19 pandemic. I feel this has accelerated the demand for excellent delivered solutions backed up by an increasing desire for digital sales solutions, which the industry is evolving to meet.

 

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