Gavin Darby Manages Corporate Renewal, Continues to Champion the U.K.’s FDF Policy
As president of the U.K.’s Food and Drink Federation (FDF) since 2017, Gavin Darby represents Britain’s food and drink industry – the country’s largest manufacturing sector, employing over 450,000 workers across 7,000 different businesses.
The FDF was built to regulate industry standards and open communication with government, regulators, consumers, and the media – a role suited for Darby following his 6-year tenure as CEO at the helm of British food manufacturer Premier Foods plc (PFD) and 16 years spanning marketing and executive positions with the Coca-Cola Company.
Gavin Darby’s CV accounts for 35 years’ experience in CEO, president, executive, and board director positions throughout telecommunication and consumer goods industries in the U.K., as well as two high-profile corporate turnarounds with Premier Foods and Cable and Wireless Worldwide.
The U.K. food company boasted a rich history of manufacturing beloved brands found in 94 percent of British households, like Mr. Kipling cakes and Ambrosia custards and puddings. But what once was one of Britain’s biggest food businesses came close to collapse in 2008 after a debt-fueled M&A spree started in 2004 and 2005 that included Hovis-owned RHM and Campbell’s Soup in the U.K. and Ireland. Brands such as Hartley’s jam, Sarson’s vinegar, and Branston pickle were sold to reduce debt before Darby’s tenure.
When Gavin Darby joined the Premier Foods team in January 2013, the company’s balance sheet was loaded with around £1 billion in debt, huge pension liabilities, and an inventory of underperforming brands.
The company required significant renewal to rectify the losses and within the year, announced an entirely new capital structure which included an underwritten equity issue of approximately £353 million, a new pension schemes agreement, a high-yield bond around £500 million, and a new lending agreement with a smaller banking group – a £1.1 billion refinancing package and pensions deal that the CEO hoped would “liberate [PFD] from its past.”
A key component to this deal also included the move to “grocery only,” moving away from Hovis and “unburden[ing] the company and liberat[ing] a strong grocery business,” said Darby.
Premier Foods reported a 2.1 percent rise in the first half trading profit following the restructuring and in the second half of 2014, launched a surge consumer marketing campaign with strong spending and new product introductions to reinvigorate dated brands.
The firm planned to spend double on consumer marketing between July and December 2014 as it had in the six months prior, including a huge relaunch of its beloved Mr. Kipling brand, a major campaign and redesign for Homepride (the first for the brand in 10 years), and new product launches under its Bisto, Oxo, Batchelors, and Sharwood’s brands.
“We plan to continue investing in innovation, marketing, our supply chain capabilities, and our people to create long-term shareholder value,” said Gavin Darby of Premier’s aggressive innovation in the second half of 2014. Significant capital investment in PFD’s largest consumer brand, Mr. Kipling, followed in 2015 with the addition of a highly-automated robotic cake line – Europe’s longest cake production line ever – in the Barnsley, South Yorkshire factory.
In 2018, Premier Foods announced a strategic alliance with Japanese Noodle Company Nissin Foods. As Darby continued working to cut debt and return the company to growth, he noted that the partnership with Nissin was “essential” to the success of the Batchelors brand, which launched new noodle pots, pastas, and soups. The alliance also allowed PFD access to Nissin’s manufacturing facilities. Sales for Premier’s range of Batchelor’s noodles reportedly generated more than £5 million in the first year.
In July 2018, Premier Foods’ Board issued a circular to shareholders following critical comments. The board praised Darby in his tenure as CEO:
“Gavin Darby became the chief executive officer of Premier Foods in February 2013 at a time when the company was in serious financial difficulties. It had net debt of nearly £1 billion, which was a ratio of 6.0x net debt to EBITDA. On the day of his appointment, the Financial Times stated that Gavin Darby faced ‘a Herculean Task.’
Since then, Gavin Darby has been successfully transforming Premier Foods throughout a challenging industry backdrop by undertaking significant cost and efficiency initiatives, properly integrating the businesses which had previously been acquired, introducing modern sales and marketing processes, and establishing positive relationships with customers… and is driving rapid international expansion.”
Four months later, alongside Darby’s departure announcement at the end of 2018, Premier published the year’s first-half financial results. According to Martin Deboo, equity analyst at Jefferies International, the fifth consecutive quarter growth for the company with first-half sales and profits was “well ahead of… expectations.” Revenue rose by 1.3 percent to reach £358 million. Premier Foods’ trading profit rose 6.2 percent to reach £51 million in the first half, and margins improved to 14.2 percent from 13.7 percent from the year prior.
Deboo added that Premier’s largest brand, Mr. Kipling, showed double-digit growth, while the fourth largest Batchelors was up seven percent. In the announcement, senior analyst at London-based City Index Fiona Cincotta added that “Darby can take credit for getting overall group sales growing more consistently and roughly halving Premier Foods’ debt pile since he took the reins,” from almost £1 billion in debt in 2013 to a much more comfortable setting around half a billion pounds while the company continues on track to reduce debt to one third EBITDA by 2020.
Cable and Wireless Worldwide was formed in 2010 – made up of its predecessor Cable & Wireless plc following the demerger of another division to form Cable & Wireless communications – a period in which all iterations had been in value free fall for over a decade.
CWW went through a tumultuous period in the first year following its formation. Shares fell to 13 pence in November 2011, adding to speculation of a takeover. In November 2011, CWW announced that it had appointed former Vodofone Group executive Darby as its new CEO.
Gavin Darby refinanced the company and made an agreement in April 2012 for a Vodofone acquisition of £1.04 billion – a company willing and able to invest in CWW’s business and its people. Darby left colleagues, pensioners, customers, and banks in a much better place than where they started during his short-lived role with CWW, and the share price rose to 38 pence on takeover.
Future With FDF
Gavin Darby started his role as FDF president in January 2017. A seasoned expert in the U.K.’s food and drink industry, Darby is properly positioned to represent FDF’s efforts to encourage rising opportunities for British manufacturing while navigating the looming challenges following Brexit.
Keep up with Gavin Darby here.
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