Nichols Plc Business Information, Profile, and History

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History of Nichols Plc

Nichols plc has changed its recipe for success for the 21st century without changing its successful recipe. The creator of the popular (in Northern England and much of the Middle East) soft drink Vimto, now produced and distributed from within its main Nichols Foods subsidiary, Nichols has expanded to include holdings in the food and beverage distribution market, notably through its subsidiaries Cabana, which supplies soft drink dispensing systems to over 6,000 outlets throughout the United Kingdom; Balmoral, the United Kingdom's leading distributor of coffee and hot beverage dispensing systems; and Nichols International, which manufactures and distributes its own and third-party foods and beverages. The company also owns Stockpack, a contract packing company providing co-manufacturing and co-packing services to the food and drinks industries. The company's diversification has enabled it to extend its sales to some 60 countries and boost revenues to more than £90 million. Quoted on the London Stock Exchange, Nichols is led by chairman and grandson of the founder John Nichols, who also holds the family's 20 percent share in the company. Day to day operations are led by managing director Gary N. Unsworth, the first non-Nichols family member to lead the company since its founding.

From Health Tonic to Soft Drink

Chemist John Noel Nichols was a supplier of herbs, herbal preparations, spices, and other substances--such as roots and tree barks--to northern England's flourishing herbalist trade at the beginning of the 20th century. Searching for new formulas, Nichols hit upon a new mix in his warehouse, combining a number of ingredients--including fruit juices such as raspberry and black currant, capsicum, vanilla, horehound, and, according to one source, the edible residue left over from the manufacture of aniline dye to produce a health tonic Nichols dubbed "Vimto," short for "Vim Tonic." Nichols began promoting his new tonic, which was intended to give its imbibers fresh vim and vigor, among herbalists of his Manchester home base. Meanwhile, the recipe for the drink remained a closely guarded family secret.

Herbalists at the time often ran small cafes, where customers were able to consume the herbal preparations. Hot water was often added to the Vimto base, but the drink also became popular with cold flat and carbonated water. During the height of the anti-alcohol movement, Nichols also promoted his cordial among the Manchester area's many teetotaler bars as a healthy alternative to "evil" alcoholic beverages.

Nichols moved to larger facilities in 1910, in Salford, outside of Manchester, where the company increased production to meet the growing demand for its drink. Yet Nichols continued to mix the drink in wooden barrels, which would not be replaced for modern equipment until after World War II. Vimto was not Nichol's only drink product. It was later joined by others, including a powdered milk preparation called "Thump." Yet Vimto was to prove the company's only lasting product.

The next step in Vimto's evolution as a popular, if steadfastly northern, drink came in 1921, when JN Nichols & Co. began supplying syrup to third-party bottlers in England and in Ireland. If no single bottle shape came to represent Vimto during this period, labels supplied by the Nichols company provided the drink with brand awareness. The company encouraged other bottlers to take on Vimto by creating advertising supports, including postcards, displays, and other promotional aids, such as "The Vimto Book of Knowledge," popularized in the post-World War I years.

Vimto had by then expanded beyond the herbalist circuit and was available, through the various bottlers and other agents, in drugstores, cafes, ice cream parlors, grocers, and the like. And by the beginning of the 1920s, Vimto had expanded beyond England as well, as the company's colonial representatives created an overseas demand for the drink. The first international market for the drink was in Guyana; the registration of the Vimto trademark there enabled the company to begin to describe itself as a Wholesale Export Druggist. A more important market opened up for the company during the 1920s, when a friend of J.N. Nichols, traveling to India, brought along samples of Vimto and helped the company develop a network of bottlers in that country. The large number of British troops stationed in India at the time, or at least the homesick northerners among them, provided a ready market for the drink. The drink was registered as a trademark in India in 1924 and soon began appealing to the local market. From India, Vimto spread to Britain's other colonies in the region, such as the former Burma and Ceylon.

Vimto was released in 1926 in the form of a syrup that allowed consumers to mix up their own Vimto drinks at home. At this time the drink continued to be promoted as a hot beverage, while proving a popular cold soft drink as well. If Vimto remained a decidedly northern England drink--and even became a source of mockery for the country's southern consumers--the health tonic was finding larger markets abroad. During the 1920s, numerous Indians had followed the British colonizers into the Middle Eastern region, and brought Vimto with them. Vimto quickly became somewhat of a traditional drink for breaking the fast of the Islamic holiday of Ramadan. Because of its non-alcoholic nature, Vimto was a popular drink in Muslim markets, such as the region that later became Pakistan.

Back in England, however, the changing tide of public opinion in the 1930s led the company to begin to promote its product as an excellent mixer for alcoholic drinks. This development saw the creation of a number of cocktails with lasting appeal, pairing Vimto with stout, ale, and other alcoholic beverages. The company had by then again expanded its production capacity, moving into to a former laundry building in Old Trafford in 1927. Nichols & Co. also operated their own fleet of delivery vehicles.

World War II forced a suspension of the Vimto brand name, as the British soft drink industry was placed under control of a war time authority. While the company continued to produce its products, Vimto was now marketed simply as a Specialty Flavor Cordial without a brand name. The lack of ingredients, due to rationing at home and the disruption of the import trade, meanwhile, made it impossible for the company to maintain the same level of quality, so it was perhaps just as well that the company was forced to temporarily suspend the Vimto brand name.

Sugar rationing continued to restrict the company's production after the war, although the Vimto brand name reappeared in 1947. The company was not able to step up to full-scale production until 1953. By then, it had modernized its facilities, equipping its production line with modern stainless steel vats as well as machinery for bottling and labeling.

The creation of the new National Health Service (NHS) in 1948 had severe repercussions for JN Nichols & Co. With the advent of NHS, a ban was placed on herbal products promoting themselves as medical aids. At the same time, the creation of the NHS made pharmaceutical products more readily available through the country's drug stores. Vimto was now forced out of its comfortable health tonic category to compete full on with such rapidly growing beverage giants as Coca-Cola, Schweppes, and Pepsi. If Vimto lacked the marketing clout of its rivals, it maintained a strong market in its northern England base, supporting by a first series of television advertisements begun in 1956, and a steadily increasing overseas market. By the middle of the century, Vimto had become a favorite in a variety of markets, not only in the Indian subcontinent and Middle East, but in parts of South America as well. Supplying the countries about the Persian Gulf, notably from ports such as Kuwait and Bahrain, the company began direct shipments from its Salford facility. In order to cut down on transport costs, the Vimto these merchants and bottlers brought was a double-concentrated syrup. And it was this sugary version of Vimto that caught on among Arab customers.

Food and Drink Distributor for the 21st Century

The Nichols family company went public in 1961, adopting the name JN Nichols (Vimto) plc. Founder J.N. Nichols had by then been joined by his sons, Peter and John. John Noel Nichols died in 1966, leaving the company to his sons. At the beginning of the 1970s, the next generation joined on, when the founder's grandson, also named John Nichols, was brought into the company, later to be joined by Simon Nichols in 1983.

By then, the company had begun to market Vimto in cans. Bearing a red-white-and-blue-striped logo evocative of the British flag, the cans, if not altogether aesthetically pleasing, nonetheless became a familiar site in the company's northern base. In 1969, the company began to produce a carbonated Vimto drink, which it canned itself. In 1971, production was transferred to a new plant in South Manchester, which included a full-scale canning and bottling line. For its overseas production, however, the company continued to rely on local bottling and canning partners, while Nichols supplied the Vimto base syrup. The recipe remained a closely held family secret. In 1975, the company signed on a new overseas partner, Solent Canners, which began production of canned, carbonated Vimto for the Kuwait and Saudi Arabian markets. That company was acquired by Nichols in 1980s and then extended its distribution network to include the United Arab Emirates.

The third generation of Nichols began taking over the company's leadership in the 1980s. In 1986, John Nichols was appointed managing director and was soon seconded by Simon Nichols, who was named as the company's financial director. The company sought a twofold expansion. Its first move was began seeking ways to break Vimto out of its northern England niche to appeal to the tastes of the country's southern regions. In order to do this the company redesigned its advertising, incorporating a bulldog, named Max, and the tagline "The Grrreat British Drink." The new campaign helped boost sales, but only briefly. As a follow-up to the advertising campaign, the company next hired outside consultants, which led the company to redesign its cans to appear more like beer cans. This too proved a short-lived campaign. By the end of the 1980s, Vimto adopted new labeling that emphasized the relatively high fruit content of its carbonated beverage. During the 1980s, also, Nichols added a new Vimto variant, a sugar-free diet version. These moves did indeed help boost the company's sales in the south of England, while Vimto remained a northern favorite.

Yet Nichols had already been branching out beyond its core soft drink brand and working toward diversifying itself to become a general food and drink distributor. In 1986, the company took a first step with the acquisition of Independent Vending Supplies (IVS). This company had been founded in 1981 and by 1983 had already become a leading manufacturer supplying the vending machine market in the United Kingdom. The IVS acquisition placed Nichols in position to enter the vending machine market; in 1989 the company changed its subsidiary's name to Nichols Foods. Throughout the 1990s, Nichols Foods positioned itself as one of the United Kingdom's leading independent supplier of not only vending machines and systems, but also a wide range of products for its machines, including Vimto, but also third-party products such as Nescafe, PG Tea, and fellow Northern soft drink brand Irn Bru.

Nichols had also ventured into another new, yet related direction in the with the acquisition of Cabana Soft Drinks in 1986. This acquisition positioned Nichols as a major supplier of draught-style soft drink dispensing systems. That operations built up more than 6,000 outlets through the 1990s. In 1995, Nichols made a new acquisition, Stockpack, adding co-manufacturing and co-packing operations, offering the use of its facilities for the production and packaging of third-party food and confectionery products.

Meanwhile, Nichols continued to explore new markets for its core Vimto brand, such as the post-Soviet Union markets, which quickly embraced Vimto as a favorite mixer for alcoholic beverages. Vimto continued to play a driving force in the company's sales; yet Nichols worked steadily on reducing its reliance on this core brand by boosting its operations elsewhere. Nichols' beverage production and distribution operations were reorganized under a new subsidiary, Vimto Soft Drinks, which launched a new drink, Indigo, marketed as a natural energy drink at the end of the 1990s.

In 1999, Nichols expanded its operations again, with the purchase of Balmoral Trading Limited. Founded in 1969, Balmoral had developed into a coffee supply company, offering dispensing equipment and products, throughout the United Kingdom. Balmoral had also correctly guessed the potential for offering more exotic coffee products, such as cappuccino, introduced in the late 1990s.

In 1999, John Nichols stepped up to the position of chairman, turning over the managing director position to Gary N. Unsworth, marking the first time the company's day-to-day operations had been guided by a non-Nichols family member. In 2000, the company, with its acquisition of Balmoral, had sufficiently expanded beyond its former core Vimto beverage product, convincing Nichols to change its name. The company now became known simply as Nichols plc in that year.

Vimto remained a key company product however. At the turn of the century, the company continued to seek new markets for its nearly famous brand name, entering Africa with distribution and bottling contracts in Angola and South Africa. In the Middle Eastern markets, which accounted for about half of Vimto sales, the company launched two new Vimto-branded products, Vimto powder, and Vimto lollipops.

In 2000 and 2001, Nichols was able to boost its Cabana and Nichols Foods operations as well. Both had long been hampered by a lack of major brand names, particularly in the cola segment, making it difficult to compete against the marketing clout of Coke and Pepsi. The addition of two new brands, Sunkist orange drink and especially of Virgin Cola, placed Nichols Foods in a stronger competitive position. The company also boosted its production and warehousing facilities, notably with the opening of a new purpose-built facility in 1999 and a 25,000-square-foot warehouse extension completed in August 2001. Nichols seemed likely to remain a key player in its U.K. vending and beverage dispensing markets, while the Vimto brand continued to sweeten taste buds around the world.

Principal Subsidiaries: Balmoral Trading Ltd.; Cabana (Holdings) Ltd.; Cabana Soft Drinks Ltd.; Cabana SJ Ltd.; Nichols Foods Ltd.; Stockpack Ltd.

Principal Competitors: Coca-Cola Bottling Co. Consolidated; The Pepsi Bottling Group, Inc.; Cadbury Schweppes plc; Topa Equities, Ltd.; Direct Wines Limited; AG Barr Ltd.

Chronology

• Key Dates:
• 1908: John Noel Nichols mixes first batch of "Vimto," an herbal health tonic, in Manchester, England.
• 1910: The company moves production to new facilities in Salford, near Manchester.
• 1919: The company begins exporting Vimto to Guyana.
• 1921: The company begins licensing bottling of Vimto to third-party bottlers.
• 1924: Vimto is registered as a trademark in India.
• 1927: The company moves to new production facilities in Old Trafford.
• 1939: Branded production suspended during the World War II.
• 1947: The company reintroduces Vimto brand; sugar rationing limits production.
• 1948: Creation of National Health Service forces Vimto to be marketed only as a soft drink.
• 1953: Full production of Vimto is once again launched.
• 1961: JN Nichols (Vimto) plc goes public.
• 1964: Launch of Vimto in cans.
• 1969: Nichols begins own Vimto canning operations.
• 1975: Grants canning and distribution license to Solent Canners
• 1980: The company acquires Solent Canners.
• 1986: Independent Vending Supplies is acquired to enter vending machines and supplies market, and Cabana Limited, entering draught beverage dispensing market.
• 1995: Stockpack is acquired to offer co-production and co-packing facilities for third-party food and candy products.
• 1999: The company acquires Balmoral Limited to begin offering coffee and hot beverage dispensing systems and products.
• 2000: The company changes its name to Nichols plc.