The first thing I noticed about Paul Baker and his co-founder at St Pierre Groupe, Jeremy Gilboy, was that in their photographs – increasingly taken at awards ceremonies and celebrations – they are unfailingly and stylishly attired.
There is a touch of class here, and it extends to the three brands whose sales St Pierre Groupe has watched go through the roof in recent years – and then pretty much stratospheric during the lockdown.
This follows a re-branding exercise last just over a year ago which saw a name change that expresses the distance the company has travelled since its inception as a management buy-out more than 15 years ago.
If you haven’t heard of St Pierre brioche burger-buns, waffles, croissants and other continental-inflected baked delicacies, you soon will. The USA, where the company has recently enjoyed an exponential sales growth, has already fallen in love with the products from coast to coast.
The Baker Street brand – the cheerful, smaller-packaged sliced loaves, buns, rolls and flan cases – is rapidly challenging the main bread biggies in independent retail, having grown revenues by 34 per cent to the end of May this year compared with 2019, while the company’s Paul Hollywood high quality, ready-to-bake range embraces the rustic and home-made vibe.
“It’s about having crusty bread and having something on the shelf you can just pull out, pop in the oven, and you’ve got warm, crusty bread in the kitchen,” says Paul with real enthusiasm.
He is a baker born and “bred”. His father had a chain of bakeries in Devon and Paul started working in them early on: “I used to dress our bakery window every morning, and you would really take care to make that window appealing,” he says. “So I have a particular affinity with understanding the pressures of a local convenience store, which is what we had, really. OK, it was a bakery but it was still a local store.”
Things are a bit different now and St Pierre Groupe, although an international success, is something of a bellwether for the return to local and quality, away from big and cheap and average.
The history of the firm goes all the way back to 1986 when Carrs Foods was established as part of a large European baking conglomerate. This Euro-ancestry is in its DNA and is the key to the St Pierre Groupe’s present-day identity. It was in the 80s and 90s that Carrs pioneered the introduction of sunny and sophisticated crepes, waffles and brioches into damp old crumpet-and-toast land.
Paul arrived as technical manager at Carrs in 2002 (he is a Master Baker and a food scientist), a couple of years after St Pierre co-founder, Jeremy Gilboy, had signed on as finance director.
“He walked into my office one day,” recalls Paul, “and said we had an opportunity to buy the business from the owners, a big bakery group called Harry’s, owned by Barilla in Italy. I said yeah, I’m in, what do we need to get?”
(Gilboy remembers it this way: “I went to talk to Paul and his reaction was priceless. He said he’d sell his soul for it. His enthusiasm was brilliant.”)
It was a very different business back then, Paul says, with a lot of private-label contracting, “Really a cake-supplier to major multiples and the convenience sector – not heavily branded.” Carrs was, nevertheless, the first to develop some ground-breaking products. It was a neat little operation of about 15 staff, Paul tells me, with turnover about £12 million, profitable and low-profile.
A change of direction
It wasn’t just luck that led to the enormous change which transformed Carrs into St Pierre Group and a small back-room boffin bakery into the international powerhouse it has become.
No, it also took bad luck.
Things were fine for several years after they bought-out the firm in 2004 ̶ “And then we got to 2008 and we nearly lost the business,” says Paul. The GFC – the Great Financial Crash – and the credit crunch proved nearly fatal for an international but unhedged business:
“Food commodities went through the roof, the currency went through the floor. We were totally exposed to the pound-euro axis and a 45 per cent margin-gap opened up almost overnight, which anybody in retail or manufacturing knows is unsustainable: nobody carries those sorts of margins,” he explains.
It was a crisis that called upon all their reserves of ingenuity. As a result, there was a business reorientation and a creative re-imagining of what the company should be.
“We realized we had an Achilles’ heel in that we were importing from Europe in a currency we had no control over. At that point we decided that we had to export, but we were an importer and didn’t know how to do it –but we knew we had to do it.”
They also decided to expand and invest in their brands instead of doing unheralded work in private label: they would convert their craftsmanship into intellectual capital.
“Importantly we decided to focus on the Convenience sector,” says Paul, “because the Convenience sector had really looked after us during that period of the Great Financial Crisis and helped us to get through. We thought we had to thank that sector by coming through with products that we see around Europe that we know could work if we made them relevant for the UK Convenience consumer.”
Brands often start in the independent sector until they land vast contracts with the big multiples and decide that’s where their loyalties ultimately lie. Not so St Pierre Groupe, whose products – with the memory of niche innovation running in their veins – have found a profitable home in the independent sector, not just in the UK but importantly in America and elsewhere.
“When you get that global view of what’s going on it does help you when you come back to the UK to say, ‘Right, what have we learned and how can we bring it to bear? How can we turn it into a compelling product offer that sells?’” Paul says.
He sums it up as a three-thread strategy –a bit like a plaited loaf: “Export, build in Convenience, and mitigate the risk to the business going forward by developing brands. We made a loss in 2008, but that’s the only year ever, and then we started to recover and grow,” Paul says with justified pride.
The first country they exported to – thanks to a chance late-night meeting at a bar – was Malta. “Then an Australian distributor saw our product while he was on holiday here, contacted us and asked if he could get our products in Australia.”
Here’s to long life!
Bread and pastries to Australia? Wasn’t that a bit far for fresh-baked products with a … shelf life? The answer of course is yes, but a vital element of St Pierre Groupe’s heritage provides the answer to another facet of their success.
That is the extended shelf-life Paul has baked into the bread and cakes of their brand stable, which adds another dimension of customer – and retailer – appeal. St Pierre Group products just don’t go stale or mouldy – at least not for months, quite literally.
It goes back to the early days when Carrs dealt with suppliers around the Mediterranean, where the climate doesn’t encourage bread to last very long.
“In southern Europe particularly they have the problem of humidity and heat, which we don’t in the UK, and bakery technologists in Europe had to solve that problem to distribute bread and rolls successfully through Mediterranean Europe,” explains Paul. “And that’s where extended-life technology came from.”
The rocketing success of the brands under lockdown was helped by the fact that fresh-bread supplies dried up for many retailers, leaving empty shelves when they were most needed to be full.
Retailers and consumers began to turn to St Pierre Groupe, whose stocks were nowhere near so time-sensitive and could still be had after the daily bread had vanished.“Because when the shelves get stripped – and we see this around the world – our product can still be there, still servicing that need,” says Paul.
As a result, recognition, engagement and trust were pretty much instantaneous for the St Pierre Groupe brands – and the customers love the products as well, seeing them as being easily as good as standard fresh fare, and perhaps (whisper it) even tastier.
“When I first joined the business I couldn’t get my head around it,” said Paul, who grew up in his father’s traditional baking environment. “But extended life is very clever and widely used in Europe, and of course we hadn’t used it in the UK.”
If it’s good enough for the fussy French, who are no slouches when it comes to bread and patisserie, why couldn’t the British get to like it?
“The 400g and 800g sliced-bread industry grew up post-war [in the UK] to feed the masses,” Paul explains. “In Europe you never had that, so they developed products for convenience, really. Sliced bread in Europe was not a thing until very recently.”
The French can buy ultra-fresh baguettes twice and sometimes three times a day – but they also have cupboards full of crinkly cellophane bags of delicious petites madeleines that … don’t go off.
“Because of our business model, we are always travelling round Europe and seeing these products, and there is an inbuilt benefit which we could see, and that’s always been part of our brands – that they offer extended life. There is no compromise on taste, and bakery tech has moved forward massively in terms of life extension,” Paul affirms.
St Pierre Groupe products have a shelf life of 35 days minimum from delivery to depot, and the company now says that the new range of products they launched last summer, including the Baker Street Sponge Flan Cases and Sponge Cake Layers, have a guaranteed life of 60 days.
But it is not just the availability and the taste-texture that adds to St Pierre Groupe’s products’attractiveness – it’s also the appeal to the social conscience that is increasingly important to consumers.
“Fresh has been in vogue forever and always will be, but it does carry huge wastage for retailers, and now consumers too are really seeing waste as a problem,” says Paul.
Selling loaves in smaller sizes, and rolls in fewer numbers, in simple packaging, as Baker Street does, has caught the spirit of the times for the company. Not only is there less to waste because the products don’t go stale for ages, there is less plastic and paper waste along with it. It’s a win-win.
“Consumers are now saying that they don’t want to be part of the problem. If there is a solution out there – and Baker Street is a solution to that issue – then I am going to trade into that,” says Paul. “And if you combine with that the size and taste of the loaf, those become compelling to consumers, and they vote with their purse.”
A changing scene
Big changes have happened and are still happening, which all seem to be to the benefit of St Pierre’s kind of baking strategy and imagination.
They are joyfully riding the wave of the food-to-go revolution, for which very many of their St Pierre brand products are perfect. The FTG sector is growing twice as fast as the rest of the grocery market and will be worth over £23 billion by 2024, more than a quarter larger than it was five years earlier [IGD], and St Pierre is locked into that growth.
Then there is America.
One of the things that strikes me as remarkable and impressive is the way that this relatively small British baker took itself to the USA and pretty soon conquered the continent – to the extent that Paul reckons that more of its revenues (£55 million) will come from America than the UK this year (£51 million).
I joke that it sort of makes them an American company, but Paul shoots back fast:
“We are a national brand in America now but we are proudly British – and we do use that in our business dealings. They like the British and when we are over there we are quite exotic, really, believe it or not. The Americans have a natural affinity with the British, and we definitely deploy that.”
It is amazing that a British company is out-Frenching the French on brioche and pain au chocolat (while out-Flemishing or out-Wallooning the Belgians on waffles – try the individually-wrapped Belgian sugar waffles with butter or the new Millionaires Waffle). And now it is also taking over in the USA – the land of dead bread, that crumbles to dust on exposure to our planet’s atmosphere. The market must have been ripe for the taking, and just like in the UK, St Pierre sells into independents in the USA, not into Walmart.
So perhaps it is no surprise that St Pierre Groupe won the Queen’s Award for Enterprise for International Trade last December.
Paul is characteristically modest about the company’s truly impressive success and innovation, crediting history with giving the firm a leg-up.
“What we have seen over the years, regarding our growth, is that the areas where we operated in bakery were niches,” he says. “We operated in specialist niches and they are now becoming mainstream. That’s one of the exciting things about retail is that you see this happening. We’ve had products in the past that has happened to, in private label, where we developed things. We were one of the first companies to develop chocolate crèpes in the UK. Now everybody know what they are and they are standard, but we launched them in a private label with a retailer.”
Niche goes mainstream: it’s a song we have heard sung in different registers over the past few years but the harmony is always communicating how the age of the mass (average products for the average consumer, piled high and sold cheap) is over – shattered by growing consumer sophistication, online sales and a taste for premiumization and quality instead of quantity.
The marketing guru Seth Godin famously said that Walmart will happily sell you a jar of pickles the size of a Volkswagen for three dollars, and if you want to see your local high street destroyed, then go ahead.
That happened in the 90s when Paul’s father lost his company to the big out-of-town malls and boxes. But now they in turn are withering away (mall landlord Intu went bust a few weeks ago, for example). Meanwhile, St Pierre croissants and Baker Street deli rolls are taking back the high street territory through indie sector sales.
Then, of course, there has been the lockdown – with plenty of opportunity for comfort eating and people treating themselves at home – using St Pierre brioche buns for their burgers at the backyard BBQ as they upgrade their domestic experience in place of no restaurants.
And – again, of course – people are shopping on their own streets once more instead of joining the endless snaking queues outside the impersonal warehouses of the mults.
“We’re just three brands,” says Paul, “but if you populate that across a store it provides an incredible pull for your locality, as opposed to driving to a big box three miles away.”
Fad, fashion, fundamental
Local shops and prestige, affordable brands are being rediscovered and appreciated, and that is not going to stop any time soon, and Paul is determined to put St Pierre Groupe at the forefront of the change.
“We always see a lot of product and the trick is picking out the winners,” he says. “I think in the past five to seven years we have got much better at saying ‘That’s a fad, that’s a fashion, that’s a fundamental.’ It’s the fundamentals we want. We try not to do the fads and fashions.”
The trajectory of the Groupe’s revenues is instructive. After near-bankruptcy in 2008, the company was turning over £16 million a couple of years later. That became £69 million by 2016, and revenues of £150 million are predicted by 2022. The pandemic, despite tight supply lines, will only have boosted that expectation, with sales in the Convenience channel up way more than 40 per cent.
“We had a chain of seven shops in Devon and the out-of-town shopping centres opened up around us and strangled every bakery in the locality,” says Paul.
It was a decade when globalization was completing its advance, squeezing wages and margins and making almost everything but giants of scale unsustainable.
“I think we were the last ones to go bust, in Newton Abbot,” Paul remembers.“There were seven retail bakeries that went bust before us. We got all of their business, pretty much, and it still wasn’t enough. And the price wars happened and we went out of business.”
The wheel has not yet turned and might never, now that online commerce is a reality. But things are looking better for living – and retailing – locally than they have done for decades. Oddly enough this is partly thanks to the pandemic.
“Customer service in retail will always be important and I think for the Convenience channel, particularly during lockdown, that’s been something a small local store can champion, and for some people that’s been a lifeline, even if it’s just a conversation at the till, that might be the only conversation somebody has all week,” Paul sums up. “My local stores have seen me in the past three months more than they have seen me in the last ten years.
“For me it’s very heartwarming, the stage I’m at in my life, to see that full circle of the big boxes giving way to the smaller, local stores again. And that is going to advance, no two ways about it.”