L-R: Martyn and Ian Smith
According to George and Ira Gershwin, they all laughed at Christopher Columbus when he said the world was round. When Ian Smith brought the first seedless grapes to the UK in the mid 1980s, nobody quite knew what to make of them. But they sold them lots of them and 30 years later, they have completely taken over the grape market in this country. He tells Tommy Leighton the details of his discovery of a brand new product for the UK market and the ongoing story of his firm, ERMS UK[1], which is part of the Lehmann & Troost[2] group of companies
There are many people who can claim legendary status in the British fruit industry. From the wholesale markets, through a band of hard-nosed entrepreneurial importers to some of the earlier supermarket buyers most people who have been around a while have plenty of stories to tell about this trade, both commercial and social.
However, not many people can legitimately claim to have changed an entire sector and while he doesn t claim to have achieved it single-handedly, Ian Smith is one of those few.
While working in sales and procurement for Superior International of which, more later Ian was sent down to South Africa, where he met Uruguayan Cacho Cabral, who marketed a bit of strawberry and some sweetcorn but was himself a pioneer in the pre-deregulation days of the country, and another legendary local character known simply as Dushan.
Other than the UK, the major European countries all had sanctions in place that meant South African fruit could not be imported. Cacho had his own plane though and he was a sanction buster, says Ian. I spent a few weeks in South Africa and Cacho and Dushan took me all over the country and introduced me to the industry. I was a country bumpkin from Earith [Cambridgeshire] and that period taught me all sorts of stuff that I didn t know and because it was a time of Apartheid in South Africa, a lot of things I didn t want to know too.
It was a tough education, but this trip led to the discovery that perhaps should have made Ian famous.
Seeded grapes were the UK grape market; there was no alternative and to Ian s knowledge, no-one in the market was craving a seedless alternative to what they were used to when he visited one of Pete Karsten Senior s farms in the Orange River region in 1985. He chanced upon a load of Thompson grapes drying in the scorching sun, for sale as raisins. They were much smaller than the seeded varieties we were used to, but they tasted good and they had no seeds, which seemed to me to be a good feature.
It turned out that there were other growers in the area with seedless grape, but the export of grape out of South Africa at that time was controlled centrally by Capespan[3] and Ian recalls that because the seeded grape business was so lucrative to its farmers in the Hex and Berg River regions, the single marketing desk was reluctant to see growers export anything else.
There was plenty of it though and we decided to truck it in 5kg boxes up to Windhoek and fly it out of there. It was sold as Namibian grape for the first few years and while it didn t go out in massive volume, as soon as it hit the ground it was sold through the markets, usually for fantastic money. You could almost name your price. It wasn t sold through the supermarkets at the time.
We wanted to sell it as soon as it arrived and we had no shortage of takers, but even though this was before vacuum cooling and precooling, I don t ever remember there being a big issue with quality.
It had never crossed my mind that grapes could or should be seeded, I have to admit the table grape market still wasn t that big back then and the only real option we had before was seeded from Spain or South Africa. Even when it came in, it wasn t a huge thing when you consider just how big seedless grapes have become since then. It certainly wasn t seen as something revolutionary, it didn t get much press coverage or appear on TV. If it happened today, I m sure it would be different, but it suited us as we were trying to keep it as quiet as possible!
After three years of head scratching, trying to work out where all of this seedless grape was being grown in Namibia, the board in South Africa saw the light and decided to open it all up. So, we had to go through the designated route and normality returned. But it was great while it lasted, the seedless grape business was established by then and fruit had begun to arrive from other countries.
Forklifts and taxis
Flying under the radar, as Cacho Cabral s planes and Ian s Thompson Seedless were doing, is a phrase that could equally be used to describe Ian s entire career. Respected by his peers and successful across a lengthy period of time, he has shied away from any publicity and very rarely has his name been seen in print during a lengthy and varied career that has seen him go from forklift driver to CEO of one of the UK s most respected fruit firms.
Ian came into the fruit business straight out of school in the early 1970s, and although he did supplement his first job as a forklift driver at Minnaar with a stint as a taxi driver, he has been in the trade ever since. He progressed into a role as shift foreman, then into QC, but the job he wanted in the sales office never quite materialised.
One of my colleagues at Minnaar had left to join Superior and one day I got a call out of the blue, he recalls. I went and had an interview with Bill Soler and then with Leo van Heyningen. They offered me 3,000 less than I was being paid by Minnaar, but I went home to Susan and we agreed that I should leave Minnaar on friendly terms in case it didn t work out and give it a go.
Working under Bob Braun and with the guidance of now fruit sales legend Tony Truman, the transition from warehouse to office was not as straightforward as Ian had imagined. But he was given the task of building business for the firm s Dutch and Spanish fruit with prospective wholesale customers across East Anglia and the Home Counties. I suppose I hadn t realised at the time, but working in the warehouse at Minnaar had given me a good understanding of the seasonality and range of imported product and as the guys I was talking too began to realise I knew what I was talking about, sales began to spiral.
Within three months, Superior had two or three trucks of product sold by Ian on the road every night. They were pleased and I was enjoying it. I always made a point of popping into the warehouse in the afternoon though, to see how things were going and I was the only one who did that. Having not worked in sales at Minnaar, perhaps naively I didn t realise at the time that a lot of the business I was gaining was being taken away from them and soon Alan Lymer, a lovely man, told me I had to go back to Minnaar.
A day of fortune
What followed was one of the more unexpectedly lucrative days Ian has experienced. Alan asked me what I d want to go back and I asked for 3,000 more than he d paid me before, which was what I was earning at Superior. As we lived 200 yards from Minnaar, that seemed OK to us, but then I got a call from Leo telling me you re staying here and offering me 3,000 more. Alan said he d match that and get me a car, Bob Braun got agitated when he did that he always sharpened his pencil! and Bill Soler said they d give me another 3,000 and get me car.
So, within a day, Ian was 6,000 better off a small fortune in those days and although the car turned out to be Bob s wife s Mini, he was getting a lift to work each day from Steve Rangeley, later of Costco[4] fame, and so Susan was able to use the car. That was fine until one winter s morning when Susan and the Mini ended up in a dyke just off the A14, recounts Ian. Then I got a brand new green Vauxhall Cavalier hatchback!
Back at work he continued to expand the east Anglian wholesale business for Superior, but also got more involved in the ex-depot business. Superior were agents for South African citrus at this time and also traded the category II Hadder brand that came in wooden boxes. I used to shift enormous quantities of citrus those were the days when a good independent greengrocer could take 10 pallets of oranges a week.
Spanish inquisition
Superior s Spanish import business revolved around citrus and celery mainly and its relationship with two production giants in Anecoop[5] and A Mu oz, but change was afoot. In 1985, Jim Rogers (now president of the Fresh Produce Consortium[6]), Derek Godfroy and Brian McGillivray broke away to establish FESA[7] and they took the two relationships with them. Exporters in those days worked through agents and at the time they were working through Pep Ortiz and the deal was done. They asked me to join them, but I decided the time wasn t right for me.
But they had taken a large chunk of the Superior International business and we were all sat around a table and asked by Superior director Cees de Wit whether we too were planning to break away. A couple said they were and there were no recriminations, but I said I wasn t going anywhere and Cees said, Ian, I want you to look after our Spanish business .
Well, we didn t have a Spanish business it had just disappeared down the road to FESA!
Hollow opportunity though it may have seemed at the time, it was the latest twist of fate that arguably shaped the rest of Ian s career. He drove his green Cavalier to a Dutch nunnery to learn Spanish where the sister allocated to teach him discovered after one day that Ian is dyslexic a concept that had never before confronted him, but now made a lot of sense. Once I did the research, I realised she was right. It made a big difference, Ian says.
When the time came to go to Spain, he was faced with a choice. We had lost all of our lemon, melon and citrus business, so I thought, what do I do now? Common sense and resourcefulness lie at the heart of much of Ian s career pathway and again, he took the correct route, by hook or by crook. At the time, there were four revision centres in Spain, as they still paid duty on their exports. The biggest one was in Abar n, in Murcia, and all of the local produce was inspected there before it left the country. So, on the basis that if the produce was there, I d also meet the people, I decided to base myself there for a month or so.
The first fruitful conversation was with a young lad called Antonio Rodr guez, third generation of a company called Frutas Romu, who had delivered a truck of melons to the centre. Even though it was a fill-in product for them, the quality of his yellow melons was excellent and we started trading from then on. Perhaps as importantly to me, he spoke good English and ended up helping me a lot with introductions to his contemporaries in other sectors. Abemar was the next company, and after visiting its facility near Llorca, which was solely exporting to Scandinavia at the time, another new supplier to Superior was gained.
Frutas Romu s major products were in the citrus category, and a new citrus and lemon supplier was netted too.
Abemar was sending us 30 or 40 trucks of iceberg [lettuce] a season within three years and 30 years later, all of these companies still supply the UK market Frutas Romu for instance is the one of the largest Spanish citrus suppliers to Sainsbury s[8] to this day and I have close friends that have come out of it.
Outside of the revision centre, Ian also came across a Ravent s[9] facility that was growing iceberg and celery on reclaimed land. They were already huge in the wine world and now they are the largest producer and bottler of sparkling wine in Spain and the second largest of red wine. Having spent a lot of time in the San Joaquin Valley in California, Pau Ravent s had seen the iceberg and brought it back to grow in Spain. He sold the whole crop to Adrian Troost, of Lehmann & Troost in the Netherlands, and he started to sell Ian some at Superior.
Brothers in ERMS
The three became friends as well as commercial partners and within a relatively short period of time, the three parties decided to go into business together in the UK. ERMS UK was formed, in 1986, by Adrian, on request of Pau, and Ian was invited to join as a founder shareholder.
When people in the UK realised what was happening with iceberg, they tried to bypass us, but Pau was extremely loyal, in spite of all the UK visitors he received, Ian says.
Talking to both Ian and his business ally Adrian Troost, it s clear that integrity and loyalty are core to their commercial principles, which both say they still find a rare commodity.
We started trading out of an office in St Ives, Cambridgeshire, and iceberg and celery was a good business then. We sold a phenomenal amount and at money you couldn t dream of now it wasn t unusual to get 10 a box at times, Ian says.
Basically we traded products for Ravent s, which by now was the largest producer of iceberg lettuce in Europe, and Adrian shipped product from Holland for us too. The main customers as that stage were the wholesale markets as the supermarket snowball hadn t left the mountain top yet. Importers were all very insular the only time anyone really talked was to either find out some information or to feed their rivals something that perhaps wasn t quite accurate!
So it was quite easy to set up a desk and trade. We plodded on, the supermarkets gained ground quickly and we were in there serving them. Unlike a lot of the competition, we were sharp and lean and it paid off.
But I knew that for ERMS to be successful in the long term, we needed more than just Spanish product. Anyone could pick up the phone and compete with us, so we needed to do something else.
Armed with the contacts and knowledge he had built up on his business travels, he had been geared up to give ERMS a flying start, but further afield he went to broaden those horizons.
California dreaming
At around the same time as the Namibian Thompson Seedless was making its mark, I went to look at some Superior Seedless from the Superior Farming Company (SFC), which was owned by Superior Oil and had a lot of land in the San Joaquin Valley, California. They had decided to look seriously at seedless table grape production and were investing a lot of money in an R&D programme. After five years, they had come up with Superior Seedless, but hadn t begun seriously planting and propagating it.
But they did have a lot of iceberg lettuce and there was a big hole in the market with its name on it. More former Superior guys, led by Mark Swanwick, had just set up Frumar and they were taking iceberg too. In the first year, SFC shipped 21lb bushels to the UK, and ERMS and Frumar were the receivers who took it all in, Ian says.
Ian and Adrian were also instrumental in bringing some of the first seafreighted broccoli and celery in from the US, but that s another story.
Adrian Troost had an established network in California and bought grapefruit in from Sun World International[10]. California grapefruit was never the best, but there was a gap in the market for it and Adrian moved no end of the product. But it proved beneficial to us in another way as SFC had decided to move out of the fruit business and sold that business to Sun World International.
So started a strong relationship with Sun World, which saw ERMS import seedless grape through the licensor for many years. They started to grow the rootstock further south, in the Coachella Valley and then began to move their rootstock around the world and to manage the rights and fees etc The first place they went was Mexico, obvious as it was just across the border, and I used to wander around Hermosillo in those early days with my counterparts from Griffin & Brand[11] and Mack[12].
The Mexican industry was involved in something it had never experienced before and I think with hindsight, Sun World could perhaps have gone to a European country first, because in a fairly short time, the rootstock was cropping up around the world and it had lost control of its distribution. But it was when we got involved in the US and Mexico, as well as South Africa, that we began to serve the supermarkets with seedless grape alongside our seeded grape offer. We worked with Morrisons[13] first and although seedless was still a bit ad-hoc, it soon became an indispensable part of any programme.
As well as missing out on the fame, which doesn t bother him one iota, Ian readily admits that he probably could have accrued a bit more money for the business at various junctures. Looking back, we almost certainly didn t get the best value out of what we did, but you re so involved in it at the time that you don t take the time to step back and analyse what s happening, he says.
We also introduced Mu oz[14] to Sun World and they became a licensee in Spain, although for some reason, they were never able to get the best out of Sun World s varieties. It did put them on the map though and helped them expand their business in other areas.
Service provider
ERMS UK was set up as a trading company, not a service provider, but over the years, it has added several new strings to its bow. In 1989, the company bought a 15,000ft2 unit in Witchford, near Ely. For the first year at Witchford, I would sell in the morning, pack in the afternoon and I d drive the lorry to deliver the produce on Sunday and Wednesday nights, Ian says. The dedication paid off and three years later, ERMS took on the neighbouring building and doubled the size of the facility.
Ian was at the forefront when supermarkets began to talk about category management and among the very first to offer the 24/7/365 service that the new regime required.
Although no-one had a single definition for what category management was, to me it was clear that it was only going to go one way. The supermarkets all wanted to narrow their supply base and save costs in-house and they were keen to identify the growers and suppliers who could help them do that. The landscape and the atmosphere were changing and across the continent, importers had to take a position.
Many importers aligned themselves to certain supermarkets, but it quickly became a case of how you could position yourself to have something different to offer. It reached the point where we had moved away from being a trader and more towards a service provider.
The insular attitudes had to go too, decided Ian. I think I pre-empted the need for organisations in the UK to work more closely together and to find economies of scale wherever possible in their facilities and procurement processes. It was quite radical at the time, because it was a time of change and no-one wanted to trust anyone else, but I felt it was the obvious way for us to defend and hold onto some of our margin.
With Adrian s infectious enthusiasm behind us all the way, we decided the time was right to go and find a building of our own. An industrial estate location didn t seem right, and the price of land meant we could buy somewhere that would give us the option to grow and if we didn t, we d move on, recalls Ian.
The desire to expand was clearly built into the company s DNA and jumping forward a few years, by 2000, it had outgrown the Witchford premises and moved again with the view to buy and build. Its new home was a packhouse and four cold stores in Chatteris in a 50,000ft2 facility named Frans House after Adrian s father. Ian s son Martyn or Charlie as he is more widely known also joined the business at this time, at a key stage in its development.
Mu oz moves in
A business relationship that has shaped the last 15 years of ERMS existence had been in place for a number of years, but it took on far greater significance after a conversation between Ian and MMUK[15] s then managing director Brian McGillivray, who of course was a colleague of some years before and a great friend still.
Neither Adrian nor I thought it sensible to undertake the venture without a partner and in Brian I found a man who was on the same wavelength.
We had started to pack for Mu oz when we were still at Witchford, says Ian. It was mainly citrus, with some iceberg and strawberries, and step by step, we developed into a service provider for a number of clients, although Mu oz became a larger proportion of the business.
Mu oz was also building a 12-month citrus programme through MMUK, while ERMS supplied seedless grape into Marks & Spencer[16] (M&S). And when the Chatteris site was built, MMUK moved in as a tenant lock, stock and barrel.
We provided our services to MMUK and they sold it on as part of their category management. We did the packing, and I trained all of our staff and looked after all of the operational side of things for them, Ian says. I oversaw the service provision from start to finish, through the coldstorage, the infrastructure, the equipment and machinery and the mechanics, and all of the operation protocols; so they could concentrate on their core strength the marketing of the product. We helped M&S perfect its year-round grape programme.
In the time it has resided in its current premises, MMUK has seen its turnover rise from around 15 million a year to 200m plus. By 2007, ERMS had expanded into a further 160,000ft2 of warehouse and office space (Named Ronald House after Ian s father), which has enabled MMUK s flower business (formerly known as Colors Flowers) to sprout up and supply first M&S and now a number of other retail chains. However, after a turnover of people at the head of the company, it recently handed in its notice and will leave the Chatteris facility in less than 18 months. It has also decided to run its own operations and Ian is now back on the case with ERMS.
We had 600 people on the site, and my attention has been fully focused on them for a lot of the time MMUK was with us we were on a journey with MMUK and it was good while it lasted. It’s not easy to be a service provider and do it profitably, but we managed to introduce the economies of scale and the disciplines that enabled MMUK to do things that no other company could do.
Opportunity knocks
Ian sees this as a major opportunity for ERMS to redeploy that experience, infrastructure and expertise to profit itself and other partners. We have retained a position of neutrality for many years because of our relationship with MMUK and therefore the major customers in the UK have perhaps seen us as being on the second step. My son (Martyn) has run ERMS very well through what has been a difficult trading period. Now, we are a small family business again, right now operating in a narrower field, but we remain extremely ambitious.
We have a good customer profile and solid business, with a huge amount more behind us. We also still own a fantastic facility, with more than 40,000ft2 of packhouse capacity and another 120,000ft2 of coldstorage capacity that we have built and paid for ourselves, and we have all of the capabilities necessary to run that for ourselves, or any partner. We don t owe the bank anything and we are in a very good position.
What everyone in the industry is trying to do is find something that no one else has got. The supermarkets started the ball rolling 20-odd years ago and obviously the pace has quickened. Everyone is looking to take cost out of the supply chain, but the reality is that on most occasions, all you are really doing is transferring those costs somewhere else. Trying to reinvent the wheel is a thankless task as always, it’s more about finding that position for yourself and making the most of what you have got.
Just as category management was a misunderstood and misused phrase at times, so direct sourcing has not been fully defined to this point, he adds. The last paragraphs of the direct sourcing model have not yet been written. The farmer owns the produce and they are still free to do whatever they want with it.
In the past, the supermarkets great strength was in their ability to source volume, but now and in the future, that could also turn out to be their Achilles heel. Increasingly, the larger growers around the world have become disenchanted. They have also seen new opportunity open up elsewhere and it inevitably they will flex their muscles.
The volume of fruit that the retailers need is so important to them that they cannot turn it down.
Pioneers rarely lose the passion that drove them in their relative youth and the fire still burns within Ian. And while the rest of this interview was conducted face to face, these words from the ERMS UK website[17] sum it up as well as any. We love what we do and we have a fine team of people who help us get the best for everyone, Ian says. Working alongside family is a bonus most of the time. Working in the fresh produce industry is a privilege. Treat others as you would like to be treated is an adage that has travelled well with us, and we look forward to the next generation of Smiths joining a team of whom Martyn and I are very proud.
References
^ ERMS UK (www.ermsuk.com)
^ Lehmann & Troost (www.lehmann-troost.nl)
^ Capespan (www.capespan.com)
^ Costco (www.costco.co.uk)
^ Anecoop (www.anecoop.com)
^ Fresh Produce Consortium (www.freshproduce.org.uk)
^ FESA (www.fesa.co.uk)
^ Sainsbury s (www.sainsburys.co.uk)
^ Ravent s (www.raventos.com)
^ Sun World International (www.sun-world.com)
^ Griffin & Brand (www.griffin-brand.co.uk)
^ Mack (www.mack.co.uk)
^ Morrisons (www.morrisons-corporate.com)
^ Mu oz (www.munoz.co.uk)
^ MMUK (www.mmuk.co.uk)
^ Marks & Spencer (www.marksandspencer.com)
^ ERMS UK website (www.ermsuk.com)