Aga Foodservice Group Plc Business Information, Profile, and History

Company Perspectives:

Strategy: A strategy for growth. Aga Foodservice Group starts with a strong balance sheet, a young and energetic management team, a strategy for growth and the determination to push it through. We continue to invest in the existing businesses and indeed, our new product developments and upgrades are testament to this.

History of Aga Foodservice Group Plc

Aga Foodservice Group PLC manufactures and distributes high-end kitchen equipment and interiors for the residential market, as well as a line of kitchen equipment for the commercial and industrial foodservice and bakery markets. Aga's core product category is its line-up of cast-iron stoves, ranging from the entry-level Falcon (stoves priced up to approximately $4,000), to the mid-priced Rangemaster and (starting at approximately $10,000 per stove) Aga brands, and up to the ultra-high-end La Cornue brand, which costs as much as $40,000 each. Aga Foodservice has been engaged in an acquisition drive during the first half of the 2000s to develop a full-service home furnishings product offering. As such, the company has acquired a number of high-end interiors brands, such as the United States' Domain and its line of kitchen, bedroom, and bathroom furnishings; terracotta tile specialist Fired Earth; and a 40 percent stake in French furniture maker Grange. In 2003, the company developed a new catalog, the Address Book, gathering its brand family into a single, coherent product offering. Concurrently, Aga has developed its institution division, Aga Foodservice Equipment, which includes Adamatic, Belshaw, Bongard, Falcon Foodservice Equipment, Miller's Vanguard, Victory Refrigeration, and Williams Refrigeration. The company's acquisitions in this category have enabled it to present a full range of kitchen equipment, including stoves, ovens, refrigeration, fryers, and doughnut makers and the like for the commercial foodservice and bakery markets. Aga Foodservice was formed from the breakup of former conglomerate Glynwed in 2001. The company is listed on the London Stock Exchange and is led by CEO William McGrath.

Starting Out at 150 Years Old in 2001

Glynwed International PLC was a highly diversified and ultimately unfocused collection of mostly industrial companies at the beginning of the 2000s. Founded in 1939, Glynwed began its march toward conglomerate status--a popular trend among companies in the United Kingdom in the late 1960s--when in 1969 it acquired Allied Iron Founders. Glynwed not only boosted its revenues by more than 100 percent in the deal, it also acquired a business that served as the basis for its later transformation into a focused kitchen equipment company. That business was Aga, a manufacturer of cast-iron stoves.

In the meantime, Glynwed continued to expand its industrial holdings. In 1981, for example, the company acquired Durapipe, which, together with another company holding, Vulcathene, launched Glynwed's industrial pipes division. The company continued adding acquisitions through the 1980s, both in the United Kingdom and in the United States, Australia, Italy, Monaco, and elsewhere. By the mid-1990s, Glynwed's operations spanned the construction, steel and engineering, metal distribution, tubes and pipe systems, and real estate industries, as well as a small consumer products division developed around the Aga stove and other brands. That division was known as Leisure Consumer Products.

Large overly diversified conglomerates such as Glynwed fell out of favor with the global investment community in the 1990s, however. More and more companies began to streamline their structures, focusing on a narrower core of operations, and an increasing number of corporations presented themselves as "pure play" stocks as the dawn of the 21st century neared.

An important result of this trend was that Glynwed and other highly diversified companies saw their stock prices slip, in part because of the difficulty of comparing their operations with the more easily quantified pure play stocks. The pressure to steamline began to build at Glynwed as well, and by the late 1990s, Glynwed announced that it was refocusing on just two core operations, its Pipe Systems division and its Consumer and Foodservice Operations, the latter grouped around Aga. In 2001, however, Glynwed was approached by a Belgian company, Etex, with an offer to buy out its Pipe Systems division. Glynwed agreed, and then announced that it would reform itself around its remaining business, which was then renamed as Aga Foodservice Group.

By then, the Aga name had been a British mainstay for more than 70 years. Yet the technology it represented had its roots in the late 1770s when John Flavel established a foundry specialized in producing "vapour baths" modeled after those at nearby Leamington Spa. By 1803, however, Flavel had moved the foundry to Leamington Spa, where the company began to specialize in the production of cast-iron stoves. Flavel was later joined by son William, and by 1833, the company had established the Eagle Foundry, described as one of the world's largest at the time. The new site provided the testing grounds for William Flavel's invention--a cast-iron stove that offered boiling, roasting, baking, and warming functions in a single unit, and that also used solid fuel. Flavel named his stove "The Kitchener range cooker."

The Kitchener quickly became a British institution, and Flavel's company earned a number of accolades, including a coveted gold medal at the 1851 Exhibition. The invention became known the world over. Rangemaster continued improving its cooker, adding colors to the exterior, and dual fuel cookers, as well as a fold-away grill. The Kitchener, and the later Flavel brand Rangemaster, also inspired a number of imitators, notably the Falcon and Rayburn brands in Scotland, and the Stanley brand in Ireland, both founded in the 1920s and linked together into the 1950s.

In the meantime, the Kitchener had attracted interest outside of England. Sweden's Nils Gustaf Dalen, who had been awarded the Nobel Prize for Physics in 1912, had been blinded in an accident that same year. While convalescing, Dalen became interested in cooking, and specifically, in resolving a number of problems associated with cast-iron cookers at the time. Dalen began searching for a means for developing a fuel-efficient stove capable of remaining warm 24 hours per day. Basing his design on the Kitchener type of cooker, Dalen developed a highly insulated cast-iron stove capable of operating on small amounts of fuel. Cooking was done using the radiant heat of the stove, while different types of cooking were performed in one of several oven compartments, as well as on the stove top. Dalen patented his invention in 1922, and launched a new company, called the Svenska Aktiebolaget Gas Accumulator. The stove itself became known as the Aga.

The Aga's real success came in England, however. Sales in the United Kingdom began in 1929, and by 1931 the stove had been introduced in Ireland. At first, the Aga (which weighed some 1,300 pounds) was imported by a licensee, Bell's Asbestos & Engineering based in Slough. Before long, however, the Aga's success led Bell's to begin manufacturing the stove in England. That plant was later acquired by Allied Ironfounders Ltd., which also acquired the Flavel company. By the time of Allied's acquisition by Glynwed, the company's line of stoves had been expanded to include the Scottish Falcon and Rayburn brands as well.

The Aga's true success came when David Ogilvy, then an Aga salesman in Scotland, published The Theory and Practice of Selling an Aga Cooker in 1935. Ogilvy went on to found the famed advertising agency Ogilvy & Mather. In the meantime, the Aga came to represent a British tradition, particularly among the British country gentry. The company launched the New Standard Aga in 1936. In 1941, however, the company replaced all of its existing Aga models with a new series of models using standardized parts, called the Aga Standard. The Aga Standard remained the company's mainstay into the 1970s. Color was introduced in 1956, and in 1964, the first Aga model using oil was launched. By the end of the century, solid fuel was replaced by gas or electricity.

Behind the Aga Banner in the New Century

The development of a new strategy of Aga Foodservice Group was turned over to William McGrath, who had joined Glynwed in the late 1990s, and who became CEO of the now smaller company. McGrath and his executive decided to recreate the company around the Aga cooker line as its core. As McGrath told the Times: "Aga has been merrily sitting in the group since 1969 and wasn't quite getting the time, love, attention and resources that it could. The group was a good, solid business, but not really brand-oriented. The idea was to bring Aga to the centre and build the business around that."

As part of that effort, the company launched a new marketing effort designed to reposition the Aga brand. Long synonymous with a country gentry lifestyle (and even inspiring its own category of fiction, called the "Aga Saga"), Aga faced only limited growth in that market. One of the major limiting factors of the group's growth was the high degree of durability of its cookers. Indeed, an Aga cooker often lasted for decades, a fact that also had given rise to a thriving secondhand market.

Instead, Aga decided to target a younger, more urban market, introducing a new and more compact model and launching a successful advertising campaign. By the middle of the 2000s, Aga had succeeded in repositioning the brand as an urban up-and-comer's status symbol. Until 2004, the Aga brand represented the high point of the company's line of cooker brands, with the price of its cookers ranging from $10,000 to $20,000. The "entry level" Falcon brand featured cookers starting at just $4,000, and the Rangemaster represented the group's mid-point brand. In 2004, Aga was dethroned as the company's top-of-the-line brand, with the acquisition that year of France's La Cornue. With hand- built, made-to-order ranges priced as high as $40,000, the Cornue brand boasted an impressive clientele, including French President Jacque Chirac, Italy's Silvio Berlusconi, and international stars such as Brad Pitt and Celine Dion.

Aga Foodservice now set out to expand beyond being a manufacturer of stoves to develop itself as a high-end kitchen equipment and interior furnishings provider. The company used the proceeds from the sale of Glynwed's pipe division to finance an aggressive acquisition drive into the mid-2000s. In 2001, for example, the company purchased U.K.-based interiors retailer Fired Earth, adding that company's 55-store retail network. Also that year, the company purchased Elgin & Hall, a manufacturer of high-end fireplace surrounds.

Aga also launched an entry into the institutional and commercial kitchen equipment market at the end of 2001. The company first purchased Bury-based Millers Bakery Machinery in the United Kingdom, then turned to the United States, buying up New Jersey-based Adamatic, a maker of equipment for producing specialty breads and pizzas. That purchase boosted the group's U.S. presence, begun with Glynwed's acquisition of Victory Refrigeration, also in New Jersey.

The United States played host to two more Aga purchases in 2002. In April of that year, the company bought Belshaw, the world's top manufacturer of doughnut machines, based in Seattle. Belshaw controlled a 50 percent share of the global market for doughnut machines and included major clients such as Dunkin' Donuts, Krispy Kreme, and Wal-Mart. At the same time, Aga expanded its U.S. consumer presence, with the acquisition of Boston-based retailer Domain Home Fashions, providing the company with its first showroom presence in the United States. Back in Europe, the company became a leading bakery equipment supplier on the continent with the acquisition of France's Bongard.

Aga's acquisition drive continued into the mid-2000s. The company acquired a stake in exclusive French furniture maker Grange, then expanded its commercial equipment business by acquiring Northland Corporation, including its Marvel Industries unit, specialized in refrigeration equipment, in 2003. The La Cornue purchase followed in 2004; by 2005 the company had extended its cooker line again, acquiring Ireland's Waterford Stanley. In the meantime, Aga raised its European presence with the acquisition of three bakery equipment factories in France in September 2004. Aga Foodservice promised to play a leading role in the international kitchen equipment market into the new century.

Principal Subsidiaries: Adamatic; AFE Online; AFE Serviceline; Aga Ranges (U.S.A.); Belshaw; Bongard (France); Domain Home Fashions (U.S.A.); Falcon Foodservice Equipment; Fired Earth; Grange (France; 40%); La Cornue (France); Miller's Vanguard Ltd.; Mono Equipment; Northland/Marvel; Pavailler; Rangemaster; Victory Refrigeration; Williams Refrigeration (U.S.A.).

Principal Competitors: Siemens AG; Samsung Electronics Company Ltd.; Sanyo Electric Company Ltd.; Electrolux AB; Sibtyazhmash Joint Stock Company; Whirlpool Corporation; Aisin Seiki Company Ltd.; LG Electronics Inc.; BSH Bosch und Siemens Hausgerate GmbH; GE Appliances; Liebherr-International AG; Maytag Corporation; De' Longhi S.p.A. Treviso; Fagor Electrodomesticos Soc Cooperative Ltda.; Elco Brandt S.A.

Chronology

• Key Dates:
• 1777: John Flavel opens a foundry in Leamington, which later specializes in cast iron cookers, launching the "Kitchener" in 1835.
• 1922: Nobel Prize winner Nils Gustav Dalen develops the Aga cooker.
• 1929: Aga sales are launched in the United Kingdom.
• 1939: The industrial manufacturing group Glynwed is founded.
• 1969: Glynwed acquires Allied Iron Founders, including Aga, Flavel, and other brands, which are later grouped as the Leisure Consumer Products division.
• 1998: Glynwed launches a restructuring around the core of pipe systems and Leisure Consumer Products.
• 2001: Glynwed sells the pipe operations to Etex, and renames Leisure Consumer Products as Aga Foodservice; the company acquires Fired Earth and Elgin & Hall.
• 2002: The company acquires Domain Home Fashions and Belshaw in the United States and Bongard in France.
• 2003: Northland Corporation, including Marvel Industries, is acquired.
• 2004: The company acquires La Cornue in France.
• 2005: The company acquires Waterford Stanley in Ireland.