Frederick’s Dairies

Posted on 7 Mar 2012

This Lancashire ice cream maker has scooped awards and will be supplying Cadbury with Icecream for the London 2012 Olympic & Paralympic Games. By John Silcox.

Not many manufacturers are ‘cool’, but thanks to its sub-zero production temperatures and marketing tactics, ice cream maker Fredericks Dairies is in a position to stake such a claim.

“We believe that ice cream should be exciting,” says Fredericks Dairies financial director Neil Murgatroyd. “But for too long it has been strangled by drab merchandising and a poverty of imagination. Our aim is to liberate customers from ordinary ice cream one lick at a time and give people the wow factor when they think of frozen confectionery.”

“When working with frozen goods, you can’t simply stop the production line at will. All the produce will go to waste” – Neil Murgatroyd, Financial Director, Frederick’s Dairies.

But while a string of playful marketing initiatives (such as a branded amphibious ice cream van on the Thames and a poster campaign featuring a pregnant nun) highlight this approach, they belie a hard-nosed business strategy. For, thanks to targeted product diversification, Fredericks is succeeding in a competitive market dominated by large multinational rivals and is constantly looking at new ways to increase its UK ice cream sales. The Lancashire-based concern has also become the only manufacturer of ice creams to supply the caterers at the London 2012 Olympic and Paralympic Games. Murgatroyd explains: “Our business is in a constant state of flux and we’re always reinventing and remoulding ourselves for the next challenge, hungry for new ideas, opportunities and growth.”

The ingredients used to make ice cream are mixed together in enormous vats
The ingredients used to make ice cream are mixed together in enormous vats

Licences to thrill

At its Skelmersdale factory and Kirkby distribution centre, Fredericks currently employs 200 people and saw a £39 million turnover in 2010. It makes a variety of ice creams on seven production lines, fitting different consumer niches with unusual flavours such as its award-winning Golden Syrup, Refresher sweets and Candy Floss products.

In addition to supplying in-house brands, including Sainsbury’s Basics, Fredericks has the licences to sell products under the Cadbury, Del Monte, Lyles, Refreshers and Vimto labels as well as Antonio Frederici, its own luxury ice cream. The company began this type of branding in 1988, when it revolutionised the ice cream world by creating the Mars ice cream bar. Fredericks no longer holds the licence for Mars but produces another classic, the Cadbury Flake 99, which is now considerably larger.

Such licensing deals with high profile brands give many of Fredericks’ products immediate customer familiarity. This is a substantial cost saving operation compared to developing a new brand image from scratch and in return Fredericks pays sales-based royalties.

“Cadbury is an amazing brand to be associated with because of its history with the British public,” confirms Murgatroyd. “On top of this, when it became a tier-two sponsor of the Olympics, this now means Cadbury ice creams manufactured by us will be the only ice creams sold in the Olympic venues, as well as being the only offering in the frozen foods aisle of retailers allowed to display Olympic logos!”

Fredericks has invested over £800k in special mobile selling equipment for catering teams to use at this summers events. As well as putting the company’s ice creams on a global stage, these investments will play a further role in Fredericks’ bid to increase its event-based sales. At the moment this is a market it has very little exposure to, but Murgatroyd sees a future where Fredericks’ products are eaten at football matches, concerts and festivals.

“Fredericks is a great company to do business with and it’s always exciting to visit their headquarters to discuss their goals and aspirations” – Liz Flynn, Relationship Director, Lombard

Without a large marketing budget, Fredericks relies heavily on alternative publicity to drive sales. Expensive mainstream advertising campaigns are out of the question, so the business organises relatively cost-effective publicity stunts that have gained national and regional press coverage (such as the worlds first amphibious ice cream van, the Flake 99 roller coaster challenge and celebrity shaped ice lollies). To promote its Antoni Frederici brand, Fredericks ran a campaign involving racy images featuring clergy and by being banned, the images drew a wide media exposure.

£5.2m warehouse expansion

Contrary to the advertising strategy, Murgatroyd explains that no scrimping happens when it comes to the up-keep of the £20 million worth of machinery in the factory. Recently, Fredericks replaced a £200,000 packaging unit on one production line to make sure it was reliable and it is also expanding its cold storage more than two-fold, by building a £5.2 million warehouse extension.

“When working with frozen goods, you can’t simply stop the production line at will,” he says. “All the produce will go to waste, so all our factory machinery is regularly updated and replaced.

Neil Murgatroyd, Finance Director at Fredericks Dairies
Neil Murgatroyd, Finance Director at Fredericks Dairies

“The bank takes a proper interest in our business and always ask really pertinent questions when touring the factory to try and gain as much information about our way of working. RBS understands our sector and visits us regularly. We are lucky to have such a good long-standing relationship.”

Lombard relationship director Liz Flynn adds: “Capital investments are essential for companies to grow. Fredericks is a great company to do business with and it’s always exciting to visit their headquarters to discuss their goals and aspirations.”

RBS relationship director James Leipnik echoes this sentiment: “Through effective dialogue we have a strong understanding of Fredericks’ business objectives. This company has great growth potential and we wish them well in 2012.”

Today’s work is very different to the company’s humble beginnings as a one-man door-to-door ice cream sales operation. In 1895, Antonio Frederici, grandfather of current owners Frank and Phillip Frederick, brought his passion for ice cream over to the North West of England from the Italian Riviera and set up business.

Murgatroyd isn’t quite sure what Antonio would say and adds: “He would probably think we were insane if he heard about us making a ‘Hoff iced lolly’ in the shape of David Hasselhoff and getting the Baywatch star involved too. But it works!”