Walkers Shortbread Ltd. Business Information, Profile, and History

Company Perspectives

Walkers Shortbread is baked from the finest ingredients, with no artificial flavouring, colouring or preservative in sight--just as it has always been. The irresistible range of varieties is beautifully presented in Walkers distinctive tartan packaging, making it a reliably welcome gift.

History of Walkers Shortbread Ltd.

Walkers Shortbread Ltd. has baked one of Scotland's, and the world's, favorite shortbread recipes for more than 100 years. The company, based in Aberlour, in northeastern Scotland, continues to produce its shortbread and other baked goods from the same recipes developed by founder Joseph Walker in the late 1890s. Shortbread remains the company's flagship product, and the company produces a variety of shortbread recipes and packaged assortments. Other company products include oatcakes, fruitcakes, tarts, cookies, and biscuits. The company produces a successful assortment of cookies for the Weight Watchers brand; in 2005, the company added a line of Weight Watchers-branded biscuits as well. Walkers also produces and distributes a line of organic biscuits for Duchy Originals, a company established by Prince Charles to promote organic farming in the United Kingdom. Walkers Shortbread also produces products for third party and private supermarket labels. The company distributes its products through various channels in the United Kingdom, including supermarkets, small grocers, and gift shops. Walkers Shortbread is also one of the United Kingdom's top-selling export brands, in terms of overall proportion of sales, generating some 45 percent of its turnover overseas. Major markets include the United States and Canada, continental Europe, Australia, New Zealand, and India; the company also sells its products in China, Thailand, and elsewhere. Walkers operates production facilities in Aberlour and Elgin, and has launched plans to build a second factory in Aberlour as early as 2006. The company also operates a distribution subsidiary in the United States. Walkers remains 100 percent owned by the founding Walker family; James and Joseph Walker, grandsons of the founder, serve as co-managing directors. The next generation of the Walker family have also entered the company, which remains committed to its private, family-owned status. In 2004, Walkers Shortbread produced revenues of more than £69 million ($117 million).

Shortbread Success in 1898

Joseph Walker was 21 years old when he borrowed £50 and opened his own bakery in Torphins, Scotland, in 1898. Walker began developing his own recipe for shortbread, a traditional favorite in the United Kingdom. By the end of his first year in business, Walker had perfected his recipe, using no more than flour, sugar, butter, salt, and water.

The Scotsman's shortbread quickly established its reputation as one of the finest in the region. Before long, the original shop had grown too small, and Walker moved to larger premises in the Speyside village of Aberlour. The move was important in establishing the company as one of the finest shortbread producers, in part due to its water, which also provided the basis for the village's famed whiskey. Walker also bought a horse and carriage and began his first deliveries. In the meantime, Walker continued to develop new recipes, extending his range of shortbread varieties while adding other treats, such as oakcakes, cookies, and biscuits.

Walker, described by Grocer as "fierce," laid the foundation of the future Walkers Shortbread with his recipes, many of which remained company mainstays into the next century. However, Walker's two sons, James and Joseph, were chiefly responsible for the company's growth from a small bakery into a true baked goods manufacturer. As grandson James Walker told Grocer: Walker "gets the credit for founding the company, which is a difficult and brave thing to do. But the biggest credit goes to our father and uncle who had to put up with him for 30 years."

The two Walker sons joined their father in the 1930s and quickly began to develop the bakery from a local to a regional basis. The brothers introduced new products, including cakes and confectionery items. In 1936, also, the bakery motorized its delivery, adding the first of a fleet of vans with which it could extend its distribution throughout the region.

The family bakery's growth was slowed during World War II, when many of its core ingredients were placed under strict rations. During this time, the company developed its oatcake recipe, which became a popular favorite and took its place in the group's permanent product range. Following the war, the bakery's production returned to its previous level. Yet the Walkers faced continued shortages in raw ingredients, including butter. The company nevertheless remained true to its original shortbread recipe, refusing to replace butter with margarine. Walkers also became noted for its refusal to use artificial colorings, flavorings, and preservatives.

Joseph Walker died in 1954 and his sons took over as the owners of the bakery. James and Joseph began transforming the bakery into a full-fledged food company. The pair were joined by the next generation, James's children James, Joseph, and Marjorie, who all began working with the company by the beginning of the 1960s. The growing number of family members allowed the company to expand, adding shops in Grantown and Elgin. By the early 1960s, also, the bakery operated a fleet of 14 delivery vans.

Modern Company

By then the first supermarkets had begun to appear in Scotland, and the company had also begun to distribute its goods through the region's local grocers. The increasing demand encouraged the company to add new employees, and by the middle of the decade, Walkers employed over 100 people. Nearly all of these came from Aberlour itself, as the company and the village developed a close-knit relationship. In an interview with the Sunday Herald, James Walker, grandson of the founder, described the relationship in this way: "We fit beautifully into the demographics of the village. The rest of the village are mainly employed in the distilleries but there are no women on the production side of distilling so we provide alternative jobs for the women. We need the village and the village needs us. They'd literally walk through fire for us."

Walkers also began investing in machinery in order to satisfy the growing demand for its products. Despite the industrialization of its production, the company took care to maintain the quality of its shortbread. A major factor in the group's success in fulfilling its quality commitment came from its insistence on baking its shortbread and other recipes in small batches. In this way, the company was able to retain its original recipes, and its products preserved not only their flavor, but their appearance as well.

The rise of the supermarket and the growing dominance of large-scale, nationally operating supermarket chains played a role in Walkers' shifting focus from the local and regional levels to a national and then international level in the 1970s. Helping establish the company's reputation were its contracts to supply such noted British retailers as Harrods, Selfridges, Fortnum & Mason, and others. These London-based department stores also attracted a large international clientele, which led the company to begin eyeing the export market in the early 1970s.

The company launched its first exports, to France and Germany, in 1972. Soon after, the company began distributing to North America. The company began a distribution partnership with Europa Foods in the United States, which helped developed the Walkers brand into one the leading imported cookie types in North America. The group's international expansion, as well as the increased shelf space available in supermarkets, also encouraged it to develop new recipes. As such the company launched a number of new products, such as shortbread featuring chocolate chips for the U.S. market, and macadamia nut shortbread for the Australian markets, and other specialties during the 1970s and 1980s.

The increasing demand forced Walkers to move out of its original bakery facility, and into a new, custom-built, state-of-the-art production facility in Aberlour. The company nevertheless kept the original bakery in operation, for "sentimental reasons," as Marjorie Walker told Grocer, and also because the bakery was "a part of village life." The bakery also provided a proven testing ground for the company's new recipes, allowing the company to test new products with the local population before launching full production. As the company described it, "Customers around the world are enjoying a range of products that were first given the seal of approval by the villagers of Aberlour."

Leading Export Brand

Walkers continued adding to its line of recipes, producing more than 80 products by the mid-1990s. By then, the next generation of Walkers had taken the leadership following the senior James Walker's death in 1987. The younger Walkers took up positions as co-managing directors, with each assigned specific responsibilities in the company. As such Joseph Walker directed the group's production, purchasing, and distribution operations, while Marjorie Walker handled the company's administration and finance. James Walker provided the company's public face, responsible for marketing and sales.

The younger generation remained true to company tradition. As James Walker told Grocer: "Tradition is an obsession and quality is a god. And I don't say it lightly. We can maintain that because the three directors are so close to the company and the product. The product has been run by bakers, not accountants." Joseph Walker also confirmed the group's continued commitment to its tradition-based production process, adding: "We're almost fanatical about tradition, continuity and consistency. We never make changes unless absolutely necessary. The objective is to make everything in a simple, straightforward fashion."

The Walkers also remained true to their region. As James Walker expressed it: "We're more than an employer to a lot of people. We're often good friends, and have grown up with a lot of them." As such, when the company sought to expand its production capacity, it went only so far as the village of Elgin, just 15 miles away, where it built a 44,000-square-foot factory in 1995. The new facility enabled the company to step up its product range, in part through the production of private label products for the supermarket groups. Walkers also entered licensing partnerships with a number of companies, including Disney, the Thornton's chocolate brand, and, into the 2000s, Weight Watchers and Duchy Original. By the mid-2000s, Walkers' product range had grown to more than 200 items.

Walkers saw strong growth into the 2000s, notably on the export front. By the early 2000s, 45 percent of the group's sales came from international markets, with the United States, Canada, Europe, and Japan forming its major international markets. The company's North American presence was backed up in 1995 when Walker took over its North American distributor, establishing a new subsidiary, Walkers Shortbread Inc. This percentage placed the company among the leaders of the United Kingdom's food brand exporters. The company continued to seek out new markets, such as Thailand in 2003, and mainland China as well.

Walkers also prepared for its future. In 2003, the company purchased a former private school located next to its main Aberlour facility, announcing the possibility of adding new offices on the site. In 2005, the company acquired a new site in Elgin, a former sawmill. The company applied for permission to build a new 70,000-square-foot factory on the site, which was to become part of a new £16 million retail development.

At the same time, the Walker family was preparing for the future change in company leadership. Marjorie Walker retired in 2005. Later that year, James Walker revealed the company's plans to turn over its direction to the succeeding generation over the next ten years. Three of the new generation had already joined the company's management in the mid-2000s.

The announcement came as part of the company's commitment to remain a privately held, family-run concern. As James Walker told Aberdeen Press & Journal: "It will be a gradual process. But our absolute aim is to secure the company as an independent, privately owned and family-run business. We think that is very important, not just for the firm, but for the local community. It allows us to take a long-term view of things, which might not be the case if it was owned by a group of investors." With the Walker family at the helm, Walkers Shortbread appeared certain to remain a leading baked goods brand during the new century.

Principal Subsidiaries

Walkers Shortbread Inc. (U.S.A.).

Principal Competitors

United Biscuits Holdings PLC; Associated British Foods PLC; Northern Foods PLC; Goodman Fielder Proprietary Ltd.; George Weston Foods Ltd.; Arnotts Biscuits Ltd.; British Bakeries Ltd.

Chronology

• Key Dates
• 1898 Joseph Walker opens bakery in Torphins, Scotland, and develops his own shortbread recipe, then moves to a larger bakery in Aberlour.
• 1936 Walker is joined by his sons, James and Joseph, who add new recipes and motorized delivery vehicles.
• 1972 Company begins exports to France and Germany, then to North America.
• 1975 Walkers builds second production facility in Aberlour.
• 1987 Third generation of Walkers takes over as co-managing directors after death of James Walker.
• 1995 Company builds third production facility in Elgin; acquires U.S. distributor and establishes Walkers Shortbread Inc.
• 2003 Company acquires site next to Aberlour factory for future expansion.
• 2005 Walkers applies for permission to build new 70,000-square-foot factory in Elgin.